May 202014
 
 May 20, 2014  Posted by at 7:26 pm Finance Tagged with: , ,


Maurice Terrell Sinatra in gambling scene from “Guys and Dolls” July 1955

If global financial markets cannot set interest rates, they are distorted and dysfunctional by definition. Of course one may argue that they have long been distorted regardless, and there’s plenty merit to that, but without being able to determine interest rates, it is impossible for markets to become functional again, other than through a collapse so severe nobody wants to be seen dead with any paper ‘assets’ anymore. That is the inevitable fork in the road: either you allow interest rates to be – freely – set by markets, or you run head first into a market crash. There are other requirements too, like getting rid of bad debt, restructuring, allowing defaults and throwing out bankrupt zombifies market participants, but none of that will do much good as long as central banks and governments can claim the right of granting themselves the authority to set rates at their whim.

That this practice of rate setting by ‘the leaderboard’, which has gained such huge popularity all over the globe in the last 20 years that you can’t help wonder how stupid the leadership of earlier times must have been for not having done the same thing for centuries (they wouldn’t have had any troubles with debts, or gold standards …) . Maybe it has something to do with recognizing that manipulating interest rates doesn’t just do nothing to right any wrongs, it serves as a major tool to preserve the wrongs, and let them suck the lifeblood out of the real economy, in order for malignant tumors and vampirized undead to live to see another day. Interest rates in a functioning market, like stock prices and even derivatives contracts, show you where the weaknesses are in an economy, in the same way that predators target the sick and crippled and keep the herd healthy.

That rates manipulation by ‘the authorities’ would somehow be a positive thing for either markets or the larger economy, the reason central bankers claim is behind their policies, is humbug propagated by those who profit from the distortion. That is to say, politicians who threw their voters into the quicksand in an almost literally all-consuming quest for power, and finance professionals who all happened to be either downright bankrupt, on their way there, all-consumingly greedy, or any combination thereof. With the Fed funds rate hovering around the freezing point, major players can borrow for free and invest in anything bolted down or not. Which makes this announcement at Reuters today ironic to say the least:

EU Charges HSBC, JPMorgan, Crédit Agricole With Rate Rigging

European Union antitrust regulators charged Europe’s biggest bank HSBC, U.S. peer JPMorgan and France’s Credit Agricole on Tuesday with rigging financial benchmarks linked to the euro, exposing them to potential fines. The European Commission also said it would charge broker ICAP soon for suspected manipulation of the yen Libor financial benchmark. U.S. and European regulators have so far handed down some $6 billion in fines to 10 banks and brokerages for rigging the London interbank offered rate (Libor) and its euro cousin Euribor while prosecutors have also charged 16 men with fraud-related offences. “The Commission has concerns that the three banks may have taken part in a collusive scheme which aimed at distorting the normal course of pricing components for euro interest rate derivatives,” the EU competition authority said.

No, they never get enough. No matter how much rates are manipulated in their service, they still see a profit in manipulating then some more. And why not? Punishments for crimes in the financial world are exceedingly rare, and what there is is directed at banks, not bankers or traders. That, too, is part of the protect-the-zombies system that has been developed around us, at our peril. That zero interest rate policies (ZIRP) are bad for fixed income has long been recognized, but that it also pushes pension fund managers into ever lower quality assets which carry ever more risk is much easier overlooked. And that’s just the top of the iceberg when it comes to the perverting consequences of what is still to this day – hard as it should be to believe – advertized as beneficial for society.

If I go through my daily links today, and I didn’t really select them for the purpose, some of these consequences crystallize. First, Phoenix Capital via Tyler Durden:

The $12 (or $192) Trillion Fed Funds Rate Ticking Time Bomb (Phoenix)

Time and again, we’ve been told that the Great Crisis of 2008 has ended and that we’re in a recovery. Indeed, earlier this year, we were even told by Fed Chair Janet Yellen that the Fed may in fact raise interest rates as early as next year. If this is in fact true, how does one explain the following statement made by the Fed’s favorite Wall Street Journal reporter, Jon Hilsenrath?

One worry: As they move toward a new system, trading in the fed funds market could dry up and make the fed funds rate unstable. That could unsettle $12 trillion worth of derivatives contracts called interest rate swaps that are linked to the fed funds rate, posing problems for people and institutions using these instruments to hedge or trade.

So… the Fed may not be able to raise interest rates because Wall Street has $12 trillion in derivatives that could be affected? Weren’t derivatives the very items that caused the 2008 Crisis? And wasn’t the problem with derivatives that they were totally unregulated and out of control? And yet, here we find, that in point of fact, all of us must continue to earn next to nothing on our savings because if the Fed were to raise rates, it might blow up Wall Street again… Simply incredible and outrageous. What’s even more astounding is that Hilsenrath is in fact understating the issue here. It’s true that there are $12 trillion worth of derivatives contracts related to the fed funds rate… but total interest rate derivatives contracts are in fact closer to $192 TRILLION. And that’s just the derivatives sitting on US commercial bank balance sheets.

That leaves little to the imagination, I would say. The Too Big To Fail banks have contracts – bets – out on Fed interest rate policies that would sink them if Yellen would move an inch left or right without telling them first. And even of she did, the Treasury would be obliged to bail them out. That alone should be sufficient to make people say ‘hold it right there’. But nobody does. the next one is from Alhambra:

How Fed/ECB Interest Rate Repression Gifts Too Big To Fail Banks

Deutsche Bank over the weekend announced a significant dilution to existing shareholders, raising some €8 billion in equity capital in two distinct transactions. About 60 million shares are being sold in a single transaction to a new “anchor” investor, Paramount Holding Services, the investment fund of the (a?) Qatari Shiek. The second transaction is a fully underwritten offering, meaning DB has already obtained the commitment of investment banks to acquire any shares not sold into the “market.” [..] The most evident question to arise from this surprise announcement is “why now?” [..] … suspicions running toward balance sheet health can be understood. In that framing, DB’s capital might look dangerous, particularly with its primary position as the largest derivatives trader in the world. As we know from bank earnings across the industry, fixed income has been an extreme sore spot and one of rising concern (derivative trading falls in here).

Large corporations, especially banks, use artificially ultra-low interest rates to shore up their financial positions. Apple had a huge share issue recently, and Apple is fine but they do it too, simply because it’s so obvious. But it’s taking a seriously scary direction now. Because in a global economy that can only approach recovery in journalists’ and politicians’ fantasies, “There’s more capital out there than we can consume, a huge wall of money”, as Bloomberg Shell’s CEO saying:

Long-Bond Frenzy Gains Strength as Sales Surge

The cheapest long-term borrowing costs on record are enticing companies into the bond market and allowing them to lock in rates for up to 100 years. “My treasurer tells me always borrow when you can, not when you have to,” said Simon Henry, CEO at Royal Dutch Shell. Global borrowers from Shell in The Hague to Peoria, Illinois-based Caterpillar raised a record $368 billion this year from bonds maturing in 10 years or more, according to data compiled by Bloomberg. The average yield companies pay to raise long-dated debt worldwide fell 61 basis points this year to 4.4%, approaching the low of 4.1% reached in 2013 … [..]

“There are huge liquid pools at whatever tenor we need,” Shell’s Henry said [..]“There’s more capital out there than we can consume, a huge wall of money, a lot of it coming from emerging market sovereign wealth funds and pension funds that’s looking for a home.” Europe’s biggest oil company, which has $11.9 billion of cash on its balance sheet, priced 1 billion euros (1.37 billion) of 12-year notes to yield 2.5% in March, following a 30-year deal in August when it paid 4.59% to sell $1.25 billion of securities …

Caterpillar sold its first 50-year notes this month, when it paid 4.8% to raise $500 million. Toymaker Hasbro sold 30-year notes paying a 5.1% coupon, down from 6.35% when the company issued debt with the same maturity in 2010. [..] In the U.S., companies pay 4.7% on average to sell bonds of 10 years and more, approaching the all-time low 4.3% reached in November 2012. Average yields are at a record-low of 2.8% in Europe, down from a peak of 7.3% in 2008. The likelihood of borrowing costs climbing in Europe is diminishing, with policy makers considering monetary easing next month to spur slow growth in the 18-nation euro area where inflation is at less than half their goal.

If it would only be ZIRP, perhaps the damage could be contained, even if those tasked with the containing go the exact opposite direction. But there’s also the insane amount of worldwide QE programs. And it’s looking for yield. Obviously, sovereign bonds are an afterthought, though there’s so much QE sloshing around that there’s no problem getting the big players to buy them too just to please the QE providers. Still, if Shell can issue 30-year debt at 4.5%, you just know things are way out of whack, because Shell is already in big trouble with its oil and gas reserves today – they’re fast diminishing – and where the company will be by 2044 is anyone’s very very wild guess.

There’s far too much credit/money/cash running through the plumbing, and the pipes are about to burst. Where will the cracks show? How about this David Stockman take on China:

Thunderous Hard Landing Inevitable For China’s Ponzi Economy

What the People’s Printing Press of China has been doing is simply passing the hot potato by converting the vast inflow of dollars, euros and yen emitted by DM central banks into a fantastic flood of RMB. This massive expansion of the domestic monetary system, in turn, enabled the greatest credit bubble in world history. [..] China’s total credit market debt outstanding did not explode from $1 trillion to $25 trillion in just the last 14 years because the sons and daughters of rice farmers working in export factories went on a savings binge, thereby enabling a healthy expansion of debt-financed investment.

To the contrary, the central banks of the world went on a money printing binge and the comrades in Beijing took the bait. Namely, they chronically and massively scooped up excess foreign exchange from trade and capital inflows and stuffed it into the vaults at the central bank. This was supposed to keep the exchange rate battened down and the growth and export miracle ramping. [..] … the aging autocrats who ran the system, and who had learned their economics from Mao’s Little Red Book, were actually swapping the labor of their young people and resources of their land for debt emissions of the profligate West.

And in the process they were steadily inflating a fantastic credit bubble that financed the construction of anything that could be imagined by local party cadres and “businessmen” alike – airports, bridges, highways, high-rises, office towers, train stations, fast rail, shopping malls, new cities, endless factories. [..] … the party overlords got lured into a dangerous economic Ponzi. They sent more and more freshly minted credit – 20-35% more in some years – down the state controlled banking system where it was parceled out to state controlled enterprises, local party rulers and independent entrepreneurs.

And that, grasshoppers, is where, how and why Yellen and Draghi will lose their control, and their ability to shove the rates their paymasters desire down the throats of the entire planet. Too low interest rates will be, must of necessity be, utterly destroyed by too low rates of return on capital. Even if that capital is borrowed at too low interest rates.

Our leadership refuses to let free market systems do their thing, because doing so would mean curtains for the Wall Street bigwigs that got them their jobs. But the bigwigs lost behemothically big at the crap table. So what they came up with is screw fixed income, and screw the next generation of Americans and Europeans, let’s spend their money today and squeeze what wealth is left through interest rate manipulation. Which worked for years because China bought a lot of the debt that was the result, but which will also fail because China bought so much of it. China is getting hammered by the western debt in the PBOC’s vaults. It was fine to purchase it when the economy was growing at a double digit clip, but that’s long gone and will never be back.

And now the blow back is on. Which will lead to things like this:

2.3 Million UK Householders To Become ‘Mortgage Prisoners’ (Independent)

About 2.3 million householders could become “mortgage prisoners” who struggle to afford their repayments when interest rates rise, according to a report published today. [..] … the proportion of people struggling to pay their mortgage fell only slightly during this period and still stands at 1.1 million today, the foundation said. That figure could more than double to 2.3 million households – almost one in four of the 8.4 million with mortgages – by 2018 if interest rates rise to 3% as financial markets expect. The report said the total number at risk of becoming “mortgage prisoners” could be as high as 3.5 million …

If rates rise to just 3%, millions of people in the UK won’t be able to service their debts. How clear must the message become? Low interest rates can seem lovely, and there’s more than enough media propaganda to drag people even deeper into the swamp, buying homes with huge mortgages and all that. But even if you have a fixed rate locked in, you’ll still get a margin call when property prices plunge. Which they will do when rising interest rates make purchasing less attractive if not entirely impossible for you.

Forcibly and artificially low interest rates are not there for your benefit, so using them to get what you want, whether it’s a home, a car, or anything else, is a very dangerous thing to do. If only because those who have the power to lower rates have that power only for a limited period of time.

Free and properly restructured markets, having gone through needed defaults to clean the herd of disease, markets cleared of zombies, are the only thing that’s actually good for you. Unless you have a big mortgage. Well, that’s just too bad, you should have paid attention. What’s been going on for the past 20 years is packing an ever larger weight onto the backs of your children, a weight so forbidding they’ll never be able to walk upright.

Hey guys, you’re the ones letting it happen, no use blaming anyone else. Until and unless you say ‘hold it right there’, this is not going to stop, it’s just going to get worse. And when rates start rising, and they will, because there is no other way for them to go, there is no other option, you will be the ones paying the bill. But at the same time, rising interest rates are the very, and only, thing that can cleanse our economies.

The $12 (or $192) Trillion Fed Funds Rate Ticking Time Bomb (Phoenix)

Time and again, we’ve been told that the Great Crisis of 2008 has ended and that we’re in a recovery. Indeed, earlier this year, we were even told by Fed Chair Janet Yellen that the Fed may in fact raise interest rates as early as next year. If this is in fact true, how does one explain the following statement made by the Fed’s favorite Wall Street Journal reporter, Jon Hilsenrath?

One worry: As they move toward a new system, trading in the fed funds market could dry up and make the fed funds rate unstable. That could unsettle $12 trillion worth of derivatives contracts called interest rate swaps that are linked to the fed funds rate, posing problems for people and institutions using these instruments to hedge or trade.

So… the Fed may not be able to raise interest rates because Wall Street has $12 trillion in derivatives that could be affected? Weren’t derivatives the very items that caused the 2008 Crisis? And wasn’t the problem with derivatives that they were totally unregulated and out of control? And yet, here we find, that in point of fact, all of us must continue to earn next to nothing on our savings because if the Fed were to raise rates, it might blow up Wall Street again… Simply incredible and outrageous. What’s even more astounding is that Hilsenrath is in fact understating the issue here. It’s true that there are $12 trillion worth of derivatives contracts related to the fed funds rate… but total interest rate derivatives contracts are in fact closer to $192 TRILLION.

And that’s just the derivatives sitting on US commercial bank balance sheets. We’re not even including international banks! So…the US economy is allegedly in recovery… the financial markets are fixed… and all is well in the world. But the Fed cannot risk raising interest rates to normal levels because Wall Street has over $12 trillion (more like over $100 trillion) in derivatives contracts that could blow up. That sure doesn’t sound like things were fixed to us. If anything, it sounds like the stage is set for another 2008 type disaster.

Read more …

How Fed/ECB Interest Rate Repression Gifts Too Big To Fail Banks (Alhambra)

Deutsche Bank over the weekend announced a significant dilution to existing shareholders, raising some €8 billion in equity capital in two distinct transactions. About 60 million shares are being sold in a single transaction to a new “anchor” investor, Paramount Holding Services, the investment fund of the (a?) Qatari Shiek. The second transaction is a fully underwritten offering, meaning DB has already obtained the commitment of investment banks to acquire any shares not sold into the “market.” At the completion of these transactions, DB is expecting its primary capital ratio (Tier 1 under Basel III) to rise from 9.5% to 11.8%. The bank itself is saying the capital injection is intended as an opportunity for advancement into several markets, while strengthening core capital ahead of schedule.

I think that is true to some degree, but there is clearly a more nuanced situation as it relates to at least one giant’s expectations for future finance. NOTE: none of the following is intended as an opinion on DB’s plans specifically, but rather a commentary and opinion about the state of overall finance and banking. The most evident question to arise from this surprise announcement is “why now?” Given the rather stark blow to the economic recovery narrative from last week, suspicions running toward balance sheet health can be understood. In that framing, DB’s capital might look dangerous, particularly with its primary position as the largest derivatives trader in the world. As we know from bank earnings across the industry, fixed income has been an extreme sore spot and one of rising concern (derivative trading falls in here).

Read more …

Even if they’re foreclosed on.

2.3 Million UK Householders To Become ‘Mortgage Prisoners’ (Independent)

About 2.3 million householders could become “mortgage prisoners” who struggle to afford their repayments when interest rates rise, according to a report published today. In the first detailed study of the likely impact of rate rises, the Resolution Foundation think tank predicted that 770,000 households – one in 10 of those with mortgages – will be most at risk. They will be unable to switch to better deals to protect themselves against rate rises or will find that their monthly repayments soak up at least one third of their disposable income by 2018. Although the Bank of England last week played down the prospect of an early increase in interest rates, City analysts expect them to start rising from April next year.

Some Conservatives are nervous about the political impact of a rise before next May’s general election. Mark Carney, the Bank’s Governor, who said at the weekend that it might intervene to stop the housing market overheating, added: “We don’t want to build up another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term.” The independent think tank raised the alarm about the most vulnerable 770,000 households already with mortgages, saying they were “doubly exposed”. Typically, they might have very low equity in their home (less than five per cent), might be self-employed or have an interest-only mortgage, making them less attractive to lenders. Secondly, it would take only a relatively modest rise in rates by 2018 for a third of their income to be eaten up by mortgage repayments.

Today’s report, “Mortgaged Future”, cast doubt on the so-called “golden age” for home-buyers while interest rates have remained at a record low 0.5% for five years. Although a household with a £75,000 tracker mortgage has saved £12,400 since 2008, many people have missed out. Wages rose by less than inflation and some householders failed to get the full reduction in rates because they were on fixed-rate deals or because their lender did not pass on all the benefit. So the proportion of people struggling to pay their mortgage fell only slightly during this period and still stands at 1.1 million today, the foundation said.

Read more …

Bubble? Nah ….. Fully organic.

Asking Prices For London Homes Rise $135,000 Since January (Guardian)

The average asking price of a property in London has risen by £80,000 since the start of 2014, as sellers try to cash in on continuing demand from buyers, according to the property website Rightmove. The listing site said asking prices in the capital hit an average of £592,763 in May, 3.3% up on April’s figure and 16.3% higher than in May 2013. Across England and Wales new sellers are asking 8.9% more than a year ago, at an average of £272,003. The annual rate is creeping closer to the 10.4% seen in October 2007 while a month-on-month rise of 3.6%, or £9,409, was the highest ever seen in May. The figures follow comments over the weekend by the Bank of England governor, Mark Carney, that the property market poses a risk to economic recovery. He warned of “deep, deep structural problems” in the UK market, and said the main problem was that not enough new homes were being built.

The strength of price rises in the capital has been driving fears of a bubble and calls for the Bank to step in to calm prices. Rightmove said demand and asking prices were now rising across England and Wales, but the increases in London were distorting the national picture. Asking prices in Greater London have risen by £4,405 a week in 2014, compared with £1,521 for the rest of the country. An increase in new sellers earlier in the year was reversed in May as the number of homes being newly put up for sale fell 1% compared with April. It was thought to be the result of the timing of bank holidays. Rightmove’s director, Miles Shipside, said:”London prices traditionally pick up earlier than the rest of the country, and while it appears to be slowly dragging other regions along in its wake, the difference is still very marked, particularly when the percentage increases are turned into hard cash comparisons.

Read more …

ECB Plans Negative Rate on Bank Deposits (Spiegel)

When it meets on June 6, SPIEGEL has learned, the European Central Bank may implement a negative interest rate for financial institutions seeking to park their money at the Frankfurt powerhouse. The move is aimed at spurring loans. European Central Bank executive board member Peter Praet of Germany is expected to recommend that the bank cut its main refinancing rate from the current 0.25 percent to a record low of 0.15 percent when the bank’s Governing Council meets on June 5. In addition, the bank also wants to introduce a negative rate on bank deposits of -0.1 for the first time in its history.

The ECB’s deposit rate is currently at zero, and a further cut would mean that banks would effectively have to pay a fee to park their money. Normally they would be paid interest to do so. Under the new punitive rate, if a bank were to deposit €100 million in a central bank account, the ECB would withhold €100,000. The measure is aimed at encouraging banks to lend money rather than park it at the ECB. It is hoped the move will prevent the kind of credit crunch and freeze in lending seen during the height of the euro crisis, when private and corporate loans all but dried up. Particularly within the crisis-plagued countries of the euro zone, consumers and companies are still having a difficult time obtaining loans.

The lower interest rate could also lead to a drop in the euro’s high exchange rate. However, sources told SPIEGEL that the Governing Council is not expected to discuss the purchase of further sovereign and corporate bonds. ECB President Mario Draghi is said to want to hold off on these measures in case the rate of price increases continues to fall in the euro zone. It is also reported that the Italian head of the ECB is also considering reducing the number of meetings of the Governing Council, in which monetary policy decisions are made, to just three of four times a year. The goal of the shift is to reduce the amount of speculation among investors and in the media in the run-up to the policy meetings.

Read more …

““There’s more capital out there than we can consume, a huge wall of money … ”

Long-Bond Frenzy Proves Financial System Broken, Rates Must Rise (Bloomberg)

The cheapest long-term borrowing costs on record are enticing companies into the bond market and allowing them to lock in rates for up to 100 years. “My treasurer tells me always borrow when you can, not when you have to,” said Simon Henry, chief financial officer at Royal Dutch Shell. Global borrowers from Shell in The Hague to Peoria, Illinois-based Caterpillar raised a record $368 billion this year from bonds maturing in 10 years or more, according to data compiled by Bloomberg. The average yield companies pay to raise long-dated debt worldwide fell 61 basis points this year to 4.4%, approaching the low of 4.1% reached in 2013, Bank of America Merrill Lynch data show. The benefit to companies of selling long-term debt is that it reduces their risk of rolling over borrowings anytime soon.

Treasurers are keen to beat increases in benchmark rates even as there are mixed signals as to when that will happen, with inflation remaining below central bank targets and many economies smaller than they were in 2007. From a lender’s perspective, insurers and pension funds want the higher coupons offered by longer-dated bonds and like the guaranteed income to meet their far-reaching commitments. The average maturity of global company notes has climbed to 8.5 years, compared with 8.1 years over the past decade, Bank of America Merrill Lynch data show. “There are huge liquid pools at whatever tenor we need,” Shell’s Henry said at The Economist’s Bellwether Europe conference in London on May 15. “There’s more capital out there than we can consume, a huge wall of money , a lot of it coming from emerging market sovereign wealth funds and pension funds that’s looking for a home.”

Read more …

Thunderous Hard Landing Inevitable For China’s Ponzi Economy (Stockman)

For two decades now mainstream Keynesian economists have been gumming about China’s remarkable economic boom and its accumulation of unprecedented foreign exchange reserves. The latter hoard has now actually crossed the $4 trillion mark. But this whole narrative is PhD jabberwocky with a Wall Street accent. What the People’s Printing Press of China has been doing is simply passing the hot potato by converting the vast inflow of dollars, euros and yen emitted by DM central banks into a fantastic flood of RMB. This massive expansion of the domestic monetary system, in turn, enabled the greatest credit bubble in world history.

Stated differently, China’s total credit market debt outstanding did not explode from $1 trillion to $25 trillion in just the last 14 years because the sons and daughters of rice farmers working in export factories went on a savings binge, thereby enabling a healthy expansion of debt-financed investment. To the contrary, the central banks of the world went on a money printing binge and the comrades in Beijing took the bait. Namely, they chronically and massively scooped up excess foreign exchange from trade and capital inflows and stuffed it into the vaults at the central bank. This was supposed to keep the exchange rate battened down and the growth and export miracle ramping.

In age old fashion this mercantilist gambit seemed to work for a while – indeed, a long while of nearly two decades. But all the time the aging autocrats who ran the system, and who had learned their economics from Mao’s Little Red Book, were actually swapping the labor of their young people and resources of their land for debt emissions of the profligate West. And in the process they were steadily inflating a fantastic credit bubble that financed the construction of anything that could be imagined by local party cadres and “businessmen” alike – airports, bridges, highways, high-rises, office towers, train stations, fast rail, shopping malls, new cities, endless factories. But the massive construction site within China’s borders defied the laws of economics and plain old rationality.

It is literally impossible for an economy to record double-digit GDP growth year-upon-year in which 50% of the gain is due to “fixed asset” investment in public infrastructure and private real estate and industrial capacity. The reason is that no society could sustain the level of consumption forbearance and mass austerity that would be required to fund such massive investment out of honest savings. Instead, the party overlords got lured into a dangerous economic Ponzi. They sent more and more freshly minted credit – 20-35% more in some years – down the state controlled banking system where it was parceled out to state controlled enterprises, local party rulers and independent entrepreneurs.

Read more …

Pot. Kettle. Off white.

China Meets US Cybersecurity Charges With Counter Claims (Bloomberg)

China suspended its involvement in a cybersecurity working group and threatened further retaliation after the U.S. indicted five Chinese military officials for allegedly stealing trade secrets. The indictment is a “serious violation of the basic norms of international relations and damaged China-U.S. cooperation and mutual trust,” Foreign Ministry spokesman Qin Gang said in a statement. Assistant Foreign Minister Zheng Zeguang summoned U.S. Ambassador Max Baucus yesterday to lodge a formal protest, the ministry said today. Qin’s sharply worded statement reflected how the charges, which accused China of a vast effort to mine U.S. technology through cyber-espionage, added new strains to a relationship already tested by past allegations of hacking. Former U.S. National Security Agency contractor Edward Snowden claimed last year that the U.S had been hacking into computers in China since 2009.

The cybersecurity working group was established last year when U.S. Secretary of State John Kerry visited Beijing and the two sides tried to patch up ties. China urged the U.S. to “revoke the so-called prosecution,” according to Qin’s statement. China will take countermeasures “if the United States goes its own way,” the Xinhua News agency said hours after the U.S. announced the indictment, citing a spokesperson for China’s State Internet Information Office. The spokesperson said the U.S. is the biggest attacker of China’s cyberspace and China is a “solid defender of cybersecurity,” according to Xinhua. It said that between March 19 and May 18, 1.18 million Chinese host computers were under the control of servers in the U.S. “China has repeatedly asked the U.S. to stop, but it never makes any statement on its wiretaps, nor does it desist, not to mention make an apology to the Chinese people,” Xinhua said, The spokesperson called the hacking charges “groundless,” according to Xinhua.

Read more …

Yeah, that they’re fine as long as they pay the fine.

Credit Suisse Plea Sends Warning to Banks Under Scrutiny (Bloomberg)

The Justice Department didn’t blink in its pursuit of a guilty plea from Credit Suisse for helping thousands of Americans evade taxes. What prosecutors accomplished with the criminal conviction – the first of a major bank in a decade – isn’t as clear. The punishment, announced yesterday in federal court, was intended to send a strong message to other banks and quell public criticism since the 2008 financial crisis that prosecutors have been soft on financial institutions. Credit Suisse agreed to pay $2.6 billion – the largest penalty in an offshore tax case – for using secret Swiss accounts to help Americans hide money from the Internal Revenue Service, concluding a three-year probe by the U.S.

If the penalty strikes the right balance between punishing the bank and containing broader market repercussions, prosecutors could use it as a model in other matters, such as a probe of BNP Paribas SA (BNP)’s transactions with sanctioned countries. “This case shows that no financial institution, no matter its size or global reach, is above the law,” Attorney General Eric Holder said at a press conference yesterday. “A company’s profitability or market share will never be used as a shield from prosecution or penalty. And this action should put that misguided notion definitively to rest.” Eight Credit Suisse employees have been indicted in the matter. Top executives including Chief Executive Officer Brady Dougan are expected to keep their jobs, even though Holder called the conduct “an extensive and wide-ranging conspiracy.”

Read more …

Punishment?

Credit Suisse Clients Remain Secret as Bank to Help US (Bloomberg)

Credit Suisse, which pleaded guilty yesterday to aiding Americans’ tax evasion, has so far avoided identifying thousands of customers who cheated the Internal Revenue Service. Instead, it promised to point investigators in the right direction. While the unit of Credit Suisse Group AG became the largest bank to plead guilty in 20 years, agreeing to $2.6 billion in penalties, its deal with the Justice Department put off the day of reckoning for the firm’s clients. They’re protected by Swiss bank-secrecy laws that make it a crime to disclose account data. In a deal overseen by Attorney General Eric Holder, Credit Suisse pledged to help the U.S. request those names through a tax treaty with Switzerland. It also will provide other information, outlining the size and number of accounts and indicating where money went.

That contrasts with UBS AG, the largest Swiss bank, which avoided prosecution in 2009 by paying $780 million and disclosing the names of 250 American clients. UBS later settled a U.S. lawsuit by revealing 4,450 more account holders. “It is a mystery to me why the U.S. government didn’t require as part of the agreement that the bank cough up some of the names of the U.S. clients with secret Swiss bank accounts,” said U.S. Senator Carl Levin, a Michigan Democrat. Levin is chairman of the Senate Permanent Subcommittee on Investigations, which issued a report and held a February hearing criticizing practices that Zurich-based Credit Suisse has now admitted, as well as the Justice Department’s failure to get more customer names. The panel found the U.S. used treaty requests to identify 238 Credit Suisse clients out of 22,000 accounts held by Americans.

The requests require Switzerland to analyze whether account holders engaged in tax fraud “and the like.” Deputy Attorney General James Cole defended U.S. efforts to identify account holders during a news conference yesterday, as he did at the Levin hearing in February. “Credit Suisse is going to provide us a lot of information — not the specific account names, but they’re going to help us in treaty requests that, under Swiss law, can get us the specific account names,” Cole said. “They’re providing us with a great deal of additional information that will allow us to determine where those accounts went, how many accounts they had, some of the size of the accounts,” he said. “We can go to other places to try and then locate those accounts.”

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Insane. Megalomania.

NSA Records Every Cell Phone Call in Bahamas, Unnamed Nation (Greenwald)

The National Security Agency is secretly intercepting, recording, and archiving the audio of virtually every cell phone conversation on the island nation of the Bahamas. According to documents provided by NSA whistleblower Edward Snowden, the surveillance is part of a top-secret system – code-named SOMALGET – that was implemented without the knowledge or consent of the Bahamian government. Instead, the agency appears to have used access legally obtained in cooperation with the U.S. Drug Enforcement Administration to open a backdoor to the country’s cellular telephone network, enabling it to covertly record and store the “full-take audio” of every mobile call made to, from and within the Bahamas – and to replay those calls for up to a month.

SOMALGET is part of a broader NSA program called MYSTIC, which The Intercept has learned is being used to secretly monitor the telecommunications systems of the Bahamas and several other countries, including Mexico, the Philippines, and Kenya. But while MYSTIC scrapes mobile networks for so-called “metadata” – information that reveals the time, source, and destination of calls – SOMALGET is a cutting-edge tool that enables the NSA to vacuum up and store the actual content of every conversation in an entire country. All told, the NSA is using MYSTIC to gather personal data on mobile calls placed in countries with a combined population of more than 250 million people. And according to classified documents, the agency is seeking funding to export the sweeping surveillance capability elsewhere.

The program raises profound questions about the nature and extent of American surveillance abroad. The U.S. intelligence community routinely justifies its massive spying efforts by citing the threats to national security posed by global terrorism and unpredictable rival nations like Russia and Iran. But the NSA documents indicate that SOMALGET has been deployed in the Bahamas to locate “international narcotics traffickers and special-interest alien smugglers” – traditional law-enforcement concerns, but a far cry from derailing terror plots or intercepting weapons of mass destruction.

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Let’s dee what happens.

WikiLeaks To Reveal NSA Info Greenwald Says Would Lead To “Deaths” (BI)

America’s National Security Agency (NSA) can “vacuum up and store the actual content of every conversation” in the Bahamas and an unnamed country, the new publication The Intercept reported Monday, based on documents leaked by whistleblower Edward Snowden. Intercept Editor Glenn Greenwald — who wrote about documents leaked by Snowden when he was a columnist for The Guardian — said the publication didn’t reveal the country because it was “very convinced” that doing so would lead to “deaths.”

After a heated discussion between WikiLeaks, Greenwald, Intercept Editor-In-Chief John Cook, and American WikiLeaks hacker-turned-Der Spiegal contributor Jacob Appelbaum, WikiLeaks tweeted that it will reveal the name of the second country being spied on by the NSA. That threat implies that WikiLeaks knows the other country — which would only be possible if the rogue publishing organization has access to the Snowden documents. There is no overt indication that it does. Consequently, there is no clear indication that WikiLeaks can back up the threat. The most plausible way for this to be possible is if Appelbaum, who led the reporting on several Der Spiegel articles based on NSA documents (which may or may not be from Snowden), shared information with his friend Julian Assange, the editor-in-chief of WikiLeaks. Applebaum tweeted that The Intercept’s redaction was “a mistake.”

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BP’s a goner, but not for this.

BP Loses Latest US Court Battle To Limit Deepwater Costs (FT)

BP has suffered a decisive setback in its court battle to limit the cost of its settlement for victims of the 2010 Deepwater Horizon disaster, leaving it with the option only of going to the U.S. Supreme Court as a last chance to avoid billions of dollars of additional liabilities. The Fifth Circuit appeals court in New Orleans on Monday rejected BP’s request for a full review of the company’s case, as it seeks to establish that the compensation settlement it agreed with plaintiffs’ lawyers in 2012 is being interpreted unfairly. The ruling means BP has now nearly run out of road in its attempt to stop the cost of the settlement soaring far above the $7.8 billion that it originally predicted. The company said in a statement it was “disappointed” by the decision and was considering its options.

In the ruling, eight of the 13 judges said they agreed with earlier panel decisions that had rejected most of BP’s arguments, and declined the company’s call for what is known as an “en banc” review by the entire court. However, in a strongly worded dissent backed by two other judges, Judge Edith Clement argued that previous court rulings would “funnel BP’s cash into the pockets of undeserving non-victims” of the 2010 spill in the Gulf of Mexico. She added that the appeals court had made itself “party to this fraud” by rejecting BP’s arguments. The company now has 90 days to decide whether it will try to persuade the Supreme Court to hear the case. BP argues that Patrick Juneau, the court-appointed administrator of claims under the settlement, has been misinterpreting it in ways that have allowed businesses that suffered no losses as a result of the spill to be awarded compensation.

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I’d Vote Yes To Rid Scotland Of Its Feudal Landowners (Monbiot)

Power’s ability to resist change: this is the story of our times. Morally bankrupt, discredited, widely loathed? No problem: whether it’s neoliberal economics, tax avoidance, coal burning, farm subsidies or the House of Lords, somehow the crooked system creeps along. Legally, feudalism in Scotland ended in 2004. In itself, this is an arresting fact. But almost nothing has changed. After 15 years of devolution the nation with the rich world’s greatest concentration of land ownership remains as inequitable as ever. The culture of deference that afflicts the British countryside is nowhere stronger than in the Highlands. Hardly anyone dares challenge the aristocrats, oligarchs, bankers and sheikhs who own so much of this nation, for fear of consequences real or imagined.

The Scottish government makes grand statements about land reform, then kisses the baronial boot. The huge estates remain untaxed and scarcely regulated. You begin to grasp the problem when you try to discover who owns them. Fifty per cent of the private land in Scotland is in the hands of 432 people – but who are they? Many large estates are registered in the names of made-up companies in the Caribbean. When the Scottish minister Fergus Ewing was challenged on this issue, he claimed that obliging landowners to register their estates in countries that aren’t tax havens would risk “a negative effect on investment”. William Wallace rides again.

Scotland’s deer-stalking estates and grouse moors, though they are not agricultural land, benefit from the outrageous advantages that farmers enjoy. They are exempt from capital gains tax, inheritance tax and business rates. Landowners seek to justify their grip on the UK by rebranding themselves as business owners. The Country Landowners’ Association has renamed itself the Country Land and Business Association. So why do they not pay business rates on their land? As Andy Wightman, author of The Poor Had No Lawyers, argues, these tax exemptions inflate the cost of land, making it impossible for communities to buy.

Though the estates pay next to nothing to the exchequer, and though they practise little that resembles farming, they receive millions in farm subsidies. The new basic payments system the Scottish government is introducing could worsen this injustice. Wightman calculates that the ruler of Dubai could receive £439,000 for the estate in Wester Ross he owns; the Duke of Westminster could find himself enriched by £764,000 a year; and the Duke of Roxburgh by £950,000.

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How could it not?

The Big Melt Accelerates (NY Times)

Centuries from now, a large swath of the West Antarctic ice sheet is likely to be gone, its hundreds of trillions of tons of ice melted, causing a four-foot rise in already swollen seas. Scientists reported last week that the scenario may be inevitable, with new research concluding that some giant glaciers had passed the point of no return, possibly setting off a chain reaction that could doom the rest of the ice sheet. For many, the research signaled that changes in the earth’s climate have already reached a tipping point, even if global warming halted immediately. “We as people see it as closing doors and limiting our future choices,” said Richard Alley, a professor of geosciences at Pennsylvania State University. “Most of us personally like to keep those choices open.”

But these glaciers are just the latest signs that the thawing of earth’s icy regions is accelerating. While some glaciers are holding steady or even growing slightly, most are shrinking, and scientists believe they will continue to melt until greenhouse gas emissions are reined in. “It’s possibly the best evidence of real global impact of warming,” said Theodore A. Scambos, lead scientist at the National Snow and Ice Data Center. Furthest along in melting are the smallest glaciers in the high mountainous regions of the Andes, the Alps and the Himalayas and in Alaska. By itself, their melting does not pose a grave threat; together they make up only 1 percent of the ice on the planet and would cause sea level to rise only by one to two feet.

But the mountain glaciers have been telling scientists what the West Antarctica glacier disintegration is now confirming: In the coming centuries, more land will be covered by water and more of nature will be disrupted. A full melt would cause sea level to rise 215 feet. During recent ice ages, glaciers expanded from the poles and covered nearly a third of the continents. And in the distant past there were episodes known as Snowball Earth, when the entire planet froze over. At the other extreme, a warm period near the end of the age of dinosaurs may have left the earth ice-free. Today the amount of ice is modest – 10 percent of land areas, nearly all of that in Greenland and Antarctica.

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Greenland Far Greater Contributor To Sea Rise Than Expected (UoC-Irvine)

Greenland’s icy reaches are far more vulnerable to warm ocean waters from climate change than had been thought, according to new research by UC Irvine and NASA glaciologists. The work, published today in Nature Geoscience, shows previously uncharted deep valleys stretching for dozens of miles under the Greenland Ice Sheet. The bedrock canyons sit well below sea level, meaning that as subtropical Atlantic waters hit the fronts of hundreds of glaciers, those edges will erode much further than had been assumed and release far greater amounts of water. Ice melt from the subcontinent has already accelerated as warmer marine currents have migrated north, but older models predicted that once higher ground was reached in a few years, the ocean-induced melting would halt.

Greenland’s frozen mass would stop shrinking, and its effect on higher sea waters would be curtailed. “That turns out to be incorrect. The glaciers of Greenland are likely to retreat faster and farther inland than anticipated – and for much longer – according to this very different topography we’ve discovered beneath the ice,” said lead author Mathieu Morlighem, a UCI associate project scientist. “This has major implications, because the glacier melt will contribute much more to rising seas around the globe.” To obtain the results, Morlighem developed a breakthrough method that for the first time offers a comprehensive view of Greenland’s entire periphery. It’s nearly impossible to accurately survey at ground level the subcontinent’s rugged, rocky subsurface, which descends as much as 3 miles beneath the thick ice cap.

Since the 1970s, limited ice thickness data has been collected via radar pinging of the boundary between the ice and the bedrock. Along the coastline, though, rough surface ice and pockets of water cluttered the radar sounding, so large swaths of the bed remained invisible. Measurements of Greenland’s topography have tripled since 2009, thanks to NASA Operation IceBridge flights. But Morlighem quickly realized that while that data provided a fuller picture than had the earlier radar readings, there were still major gaps between the flight lines.

To reveal the full subterranean landscape, he designed a novel “mass conservation algorithm” that combined the previous ice thickness measurements with information on the velocity and direction of its movement and estimates of snowfall and surface melt. The difference was spectacular. What appeared to be shallow glaciers at the very edges of Greenland are actually long, deep fingers stretching more than 100 kilometers (almost 65 miles) inland. “We anticipate that these results will have a profound and transforming impact on computer models of ice sheet evolution in Greenland in a warming climate,” the researchers conclude.

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Ice goes, land rises.

Why Antarctica Is Rising Fast (LiveScience)

Antarctica is rising unusually quickly, revealing that hot rock in the Earth’s mantle hundreds of miles below the icy continent is flowing much faster than expected, researchers say. Antarctic ice is more than 2.6 miles (4.2 kilometers) thick on some parts of the continent, a reminder that glaciers that were miles thick once covered many parts of Earth’s surface. When these ice sheets shrink, as is happening now in the world’s polar regions due to climate change, the underlying Earth rebounds upward, like how mattresses typically decompress after people get off them. Past research suggested this rebound involved very slow uplift of the Earth’s surface over thousands of years.

However, an international research team now reveals that at GPS stations on the Northern Antarctic Peninsula, the land is actually surging upward at the rate of up to 0.59 inches (15 millimeters) a year. Furthermore, “closer to the site of the ice loss — that is, right next to the thinning glaciers where we do not have any GPS sites — the Earth is likely to be rebounding significantly more than 15 millimeters [0.59 inches] per year,” lead study author Grace Nield, a geophysicist at Newcastle University in England, told Live Science.” As much as 47 millimeters [1.85 inches] per year has been predicted from our models.” The usual models of the Earth cannot account for this much uplift. “You would expect this rebound to happen over thousands of years, and instead we have been able to measure it in just over a decade,” Nield said in a statement. “You can almost see it happening, which is just incredible.”

Since 1995, several ice shelves in the Northern Antarctic Peninsula have collapsed, causing the solid Earth to bounce back. “Think of it a bit like a stretched piece of elastic,” Nield said. “The ice is pressing down on the Earth, and as this weight reduces, the crust bounces back.” The scientists analyzed data from seven GPS stations situated across the Northern Antarctic Peninsula to see how the Earth’s surface was moving. “What we found when we compared the ice loss to the uplift was that they didn’t tally,” Nield said. “Something else had to be happening to be pushing the solid Earth up at such a phenomenal rate.” The researchers suggest that characteristics of the Earth’s mantle layer — the region of the planet directly below the Earth’s crust — can explain why this rebound is happening so quickly. Specifically, 250 miles (400 km) below the Northern Antarctic Peninsula, the upper part of the mantle is at least 10 times less resistant to flow than previously thought, and much less resistant to flow than the rest of Antarctica.

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Doubling Of Antarctic Ice Loss Revealed By European Satellite (Guardian)

Antarctica is shedding 160 billion tonnes a year of ice into the ocean, twice the amount of a few years ago, according to new satellite observations. The ice loss is adding to the rising sea levels driven by climate change and even east Antarctica is now losing ice. The new revelations follows the announcement last week that the collapse of the western Antarctica ice sheet has already begun and is unstoppable, although it may take many centuries to complete. Global warming is pushing up sea level by melting the world’s major ice caps and by warming and expanding oceans waters. The loss of the entire western Antarctica ice sheet would eventually cause up to 4 metres (13ft) of sea-level rise, devastating low-lying and coastal areas around the world.

The new data, published in journal Geophysical Research Letters, comes from the European Space Agency’s CryoSat-2 satellite, which was launched in 2010. CryoSat-2 collected five times more data than before in the crucial coastal regions where ice losses are concentrated and found key glaciers were losing many metres in height every year. The Pine Island, Thwaites and Smith Glaciers in west Antarctica were losing between 4m and 8m annually. “The increased thinning we have detected in west Antarctica is a worrying development,” said Professor Andrew Shepherd, at the University of Leeds and who led the study. “It adds concrete evidence that dramatic changes are underway in this part of our planet.”It shows that the western Antarctica ice sheet is where 87% of the lost ice is being shed, with the east Antarctic and the Antarctic peninsula shedding the rest. The data collected from 2010-2013 was compared to that from 2005-2010.

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Home Forums Debt Rattle May 20 2014: May The Rate Rise With You

This topic contains 8 replies, has 5 voices, and was last updated by  Raúl Ilargi Meijer 5 years, 1 month ago.

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  • #13009

    Maurice Terrell Sinatra in gambling scene from “Guys and Dolls” July 1955 If global financial markets cannot set interest rates, they are distorted an
    [See the full post at: Debt Rattle May 20 2014: May The Rate Rise With You]

    #13013

    Diogenes Shrugged
    Participant

    Long post here. Could use some cleaning-up, but it’s only a comment after an article, not a Master’s thesis.

    Say what you will about Milton Friedman, and I do agree with you concerning Allende, but at least Friedman understood the importance of free markets to the prosperity of mankind. Anybody who states, “Freedom is my God” can’t be entirely misguided.

    The hallmark and holy grail of “free markets” isn’t growth. It’s unregulated price discovery. Price discovery gives rise to economy.

    Without price discovery, free markets don’t exist. Without free markets, labor and resources become grossly misallocated. Without price discovery, prices are set by people in power. This isn’t merely inimical to economy, it is sheer absence of economy.

    Thieves love disruptions to price discovery (or absence of price discovery) because it enables them to steal from honest people. This is because rigged prices are dishonest, and thieves name OUR prices. The biggest thieves of all, by many orders of magnitude, are those who abuse positions of political and financial power to rig prices.

    Economic systems are not all the same. The drawbacks to any economic system are directly proportional to the amount of price rigging going on. Human beings are free only in an environment where unfettered price discovery takes place, and are enslaved when prices are set by authorities. The reason the USSR was not free, and the reason it eventually collapsed is because prices were set by the government. Labor (much of it resembling slave labor) and scarce resources were utilized and developed inefficiently, favoring those at the top of the political structure and those who stole from the public, all at the expense of the public.

    You see, prices are supposed to reflect a consensus on the value of things. When prices are rigged, they bear no relationship to any value other than the one conferred by some pompous authority. It doesn’t take huge variations from the free-market price to cause destructive, accretive misallocations of wealth in the economy.

    What we witness today are myriad institutionalized VIOLATIONS of price discovery in what were formerly known as “free nations.” These are criminal violations of human freedom itself. Examples abound: refusal to “mark to market,” interest rate rigging, precious metals price rigging, no-bid government contracts, high frequency trading, bank issuance (from thin air) of the nation’s money at interest, off-budget government expenditures, farm subsidies, bank bailouts, socialized medicine, socialized public schools, a drug war that serves ONLY to provide outrageous price supports, and pretty much every single thing government spends money on, including salaries. NONE of those things (the list was by no means exhaustive) reflect prices that were discovered through free market bid-and-ask negotiation. All of those things reflect prices that are imposed by people with political authority.

    The U.S. is racing toward a similar cliff-edge as the U.S.S.R. was in the late 1980s. Many of the details are different, but the hell that an absence of economy has wrought on the citizenry is much the same – – especially the vanishing middle class. There is no way out from this mess other than various forms of widespread suffering and strife. The price-riggers are depending on their heavily militarized Homeland Security department, militarized USDA, militarized FBI, militarized CIA, militarized IRS, militarized BLM, militarized Forest Service, militarized NASA, militarized Border Patrol, militarized police departments, militarized NSA, and countless other militarized agencies of government to protect them from the impoverished masses when the U.S. suffers its own Soviet-style collapse. Do what you can to ensure that their confidence in these bloodthirsty agencies is misplaced.

    If you don’t want colossal financial crimes to be perpetrated on humanity again and again every thirty to sixty years for perpetuity, then advocate bringing the price-riggers to justice every chance you get – – and note that extreme vigilante justice (like their cops increasingly mete out) will make the memory of this historic period endure.

    The Second Amendment should have been the First. The First should have been second. And the third should have enshrined free market price discovery and severe penalties for anybody trying to circumvent that indispensable underpinning to all commerce. But maybe that’s a moot point because the Constitution and Bill of Rights don’t have teeth. If they did, if infringements against free market price discovery were promptly and severely punished, we would still have a burgeoning middle class and fluctuating, free market interest rates. (Hat tip to Bill Black for being America’s greatest advocate for criminal prosecutions of the price riggers.)

    #13032

    Raleigh
    Participant

    Diogenes – very well said! I think your post illustrates perfectly the criminality taking place. “…enshrined free market price discovery and severe penalties for anybody trying to circumvent that indispensable underpinning to all commerce.” Bingo, put it right in the Constitution, with severe penalty clauses (no piddly fines) – huge jail time.

    Ilargi – great post! “Free and properly restructured markets, having gone through needed defaults to clean the herd of disease, markets cleared of zombies, are the only thing that’s actually good for you. Unless you have a big mortgage. Well, that’s just too bad, you should have paid attention.” I can’t even begin to add up the amount of people I’ve read who vehemently disagree with that statement. They’re screaming with joy that their assets and 401K’s are up, and the only thing that would make them happier is a good old-fashioned debt jubilee. Karl Denninger pointed out that when things are rigged, one side ends up winning the lottery while the other side (the side that would have won in a free market) loses. Did I ever get shot down when I posted his article. People don’t want to hear that, and they don’t realize that if they got rid of the chain around their neck (debt), prices would come down considerably, enabling them to buy again at a much lower price.

    Everything is turned upside down, and people are in for a rude awakening. I wish nobody had to lose.

    #13033

    Raleigh
    Participant

    Over at Mish’s site, he said: “Long-term, hikes are longer off than most realize. Also, the Fed will never sell anything. Assets will be held to term.” So many differing opinions, so much collusion between central banks, so much money floating around. It’s dizzying.

    Another poster said: “It’s a magic money machine! The Fed will never sell anything; they’ll keep buying at whatever pace they choose from here on in. Sure, this is money creation – inherently inflationary – but it will continue to be so dribblingly slow the dull-witted consumer, investor and markets will never detect the price inflation resulting from it…

    Keeps the big, leveraged banks, governments and other players happy, though, doesn’t it!? A buyer of last resort for their junk.”

    When this goes down, it will be painful. But as Morris Berman said, “You don’t get history for free.”

    #13034

    Dr. Diablo
    Participant

    Great article on how without honest price discovery, everything is fraud. It’s really the definition of a “Con”, where you sell something the buyer believes is valuable, but isn’t, or you take something from them they believe is impinged or worth less, but isn’t. Then you name it “voluntary”, and thus legal. But it’s not, it’s fraud, theft, and a felony requiring prison time to protect society — you and me — from those that would kill it, and us, dead.

    On Antarctic ice, I read the collapsing sheet articles in a few places and I’m lost here. So the ice sheet is collapsing. Okay. And will raise sea levels 10 feet. Okay. Over 900 years? That’s like 2cm a year. Add to that humans don’t have a real good record of prediciting what will happen in 10 years, much less 1,000.

    But although this hasn’t seemed to have started, it’s already unstoppable? How can you know that? We only got decent records of ice and flow a few years ago and we’re still struggling to model them accurately. Okay. So it’s unstoppable. But if it’s unstoppable, why bother telling me? By definition, that means it’s too late to do anything about it. Seems to be some panic bubble surrounding this story as they transfer to the new name for Global Warming, “Climate Chaos.” Wow. Hyperbole much? Even in a 100 year melt of 1/10th ft/year rise, move back from the beachfront a little, will ya?

    But that’s not the part that makes my head hurt. It’s that after unexpectedly icing in the Global Warming scientists and the world’s largest icebreaker a few months ago, Antarctic Sea ice is at a 35-year high. https://www.washingtonpost.com/blogs/capital-weather-gang/wp/2013/09/23/antarctic-sea-ice-hit-35-year-record-high-saturday/

    So the ice is both highest we’ve seen, the antarctic is the snowiest and has the highest build we’ve seen, while the ice sheets are melting the fastest we’ve seen. I give up. This is all science-by-agenda/science-for-hire. I can’t keep up with the data as they can’t agree on dead opposites. Without becoming a scientist myself, how am I supposed to know?

    Besides, they already said it’s too late to do anything. So smoke ’em if you got ’em! Right? Jeez.

    #13035

    koso_man
    Participant

    U.S. officials cut estimate of recoverable Monterey Shale oil by 96%

    https://www.latimes.com/business/la-fi-oil-20140521-story.html

    #13043

    that is brilliant, koso.

    #13044

    koso_man
    Participant

    Someone posted it in a comment under peakoilbarrel.com….pfff goes another dream i guess.

    #13045

    Well, both Nicole and I popped that dream lots of times here, and we”re to going to be found wrong: shale is a land speculation scheme. How can you be an energy source with depletion rates of 80%+ for the average well? It’s ridiculous. But of course you do get all these lofty predictions from the EIA, that’s their job, to make things look sunny and great and all.

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