Authored by Pepe Escobar, originally posted at Asia Times,
I'm aiming at you, lover
Cause killing you is killing myself
- Orson Welles (director), The Lady from Shanghai,1947
He's invincible. He beheads. He smuggles. He conquers. He's the ultimate jack-of-all-trades. No Tomahawk or Hellfire can touch him. He always gets what he wants; in Kobani; in Anbar province; with the House of Saud (which he wants to replace) trying to make Putin (who he wants to behead) suffer because of low oil prices.
If this was a remake of Orson Welles's noir classic The Lady from Shanghai, in the mirror sequence the lawyer (American?) and the femme fatale (Shi'ite?) would also get killed; but The Caliph of Islamic State would survive as a larger than life Welles, free to roam, plunder and "give my love to the sunrise" - as in a Brave Caliphate World shining in "Syraq" over the ashes of the Sykes-Picot agreement.
He's winning big in Iraq's Anbar province. The Caliph's goons are now closing in on - of all places - Abu Ghraib; Dubya, Dick and Rummy's former Torture Central. They are at a mere 12 kilometers away from Baghdad International. A shoulder-launched surface-to-air missile (or MANPAD) away from downing a passenger jet. Certainly not an Emirates flight - after all these are trusted sponsors.
Hit, in Anbar province, is now Caliph territory. The police forces and the province's operational command have lost almost complete control of Ramadi. The Caliph now controls the crucial axis formed by Hit, Ramadi, Fallujah; Highway 1 between Baghdad and the Jordanian border; and Highway 12 between Baghdad and the Syrian border.
The Caliph's goons are no less than taking over the whole, notorious Baghdad belt, the previous "triangle of death" in those hardcore days of American occupation circa 2004. Message to Donald Rumsfeld: remember your "remnants"? They're back. And they're in charge.
Both Ramadi and Fallujah have been reduced to an accumulation of bombed-out schools, hospitals, homes, mosques and bridges. Residential streets are virtually deserted. According to the United Nations, there are a least 360,803 internally displaced persons in Anbar, as well as 115,000 others in areas under The Caliph's control. At least 63% of the 1.6 million people living in the province are classified as "in need" - with hair-raising minimal access to water, food and health care, and receiving little to absolutely zero humanitarian support from that fiction, the "international community." US Ambassador to the UN Samantha Power is not screaming her lungs out for R2P ("responsibility to protect").
How could the Pentagon's spectacular Full Spectrum Dominance possibly not see any of this happening? Of course they see it. But they don't give a damn. The Pentagon occasionally uses AH-64 Apache helicopters to attack some of The Caliph's goons in Ramadi and Hit. But Apaches can be easily hit with MANPADS. They are stationed at Baghdad International and their only mission is to protect the airport. Who cares about local, civilian "collateral damage"?
Married to the Mob
In Kobani, the former third-biggest town in Syrian Kurdistan, in the far northeast, The Caliph also wins big. Another biblical exodus has reached 300,000 refugees - and counting, with over 180,000 headed to Turkey.
The Caliph counts on indirect help from The Sultan (or alternate Caliph), aka Turkish President Tayyip Erdogan. Tehran is - rightfully - furious, as it sees the "West" - and Turkey - betraying the Kurds all over again. It's no secret Sultan Erdogan is doing nothing because he wants to screw the guerrillas of the Kurdistan Workers' Party (PKK) and the Syrian-Kurdish Democratic Union Party (PYD); let them die instead of repelling The Caliph and then be strong enough to threaten Turkish domination of those huge, essentially Kurdish patches of Anatolia. Thus the only thing Sultan Erdogan does support is aimless bombing by the Pentagon cum coalition of the clueless-cowards.
Anybody who believes the US Central Command's spin that House of Saud and United Arab Emirates fighter jets conduct "bombing raids" on the outskirts of Kobani gets a one-way ticket to Oz. Imagine these clowns being able to deploy precision-guided bombs or trained laser spotters. To start with, the Pentagon has zero local intel - as in zero operatives able to paint lasers on targets. Thus the "coalition" can barely hit the odd tank (out of 25 around Kobani) or Humvee out of 2,000 crammed in a valley for almost two weeks now.
But the "coalition" certainly is able - miraculously! - to hit Syrian state infrastructure, as in energy installations. In June, the official Pentagon excuse was, "We don't have any drone assets in Iraq." Now there's no excuse for drones which can read a "Smoking Kills!" warning in a packet of Marlboros not hitting The Caliph's assets in Kobani - or in Anbar province for that matter. So it's down to a mix of incompetence and neglect. It was so much easier to hit Pashtun wedding parties in the Waziristans. Especially because no one was paying attention.
Erdogan's own goons, meanwhile, have instituted a curfew on all major towns and cities in southeast Anatolia, and are even gunning down peaceful Kurdish protesters. Fifteen million Kurds in Anatolia cannot be wrong; Erdogan wants Kobani to fall. Ankara remains for all practical purposes the top logistical hub for The Caliph's goons. The Sultan is using The Caliph as a proxy army to smash the Kurds.
Terminal evidence has been offered by the leader of the Kurdish PYD, Salih Muslim, meeting Turkish military intel and asking for help. Conditions: abandon any hope of self-determination for Syrian Kurds; give up all your self-governing towns and regions; and watch as we install a Turkish "buffer"/no-fly zone inside Syrian territory.
Don't expect the Obama "Don't Do Stupid Stuff/We Have No Strategy" administration to sentence, "Erdogan must go". Besides, the pathetic club of National Security Advisor Susan Rice and her deputy Ben Rhodes has no clue about what's goin' on.
To the Green Zone!
Tehran, for its part, has clearly identified Erdogan's nasty game. The Sultan knows monster B1-B bombers flying over Kobani are absolutely useless - while The Caliph's goons deploy massive car bombs and keep advancing. "Boots on the ground" will be needed. Enter NATO asset Turkey. But with one condition: regime change in Damascus, or at least a prelude, via that "buffer"/no-fly zone over Syria.
The Big Picture remains the same. Sultan Erdogan and the House of Saud want regime change in Damascus (Erdogan dreams of a Sunni puppet as a vassal of Ankara; the Saudis want their own Wahhabi schemer). Israel merrily agrees. And if that comes with a bonus - attacking the new Iraqi government, still supported by Iran, in the American-made Green Zone - even better. The lowdown: "Don't Do Stupid Stuff" translates as the Gulf Cooperation Council, Turkey and Israel using Washington to advance their quite explicit agenda.
Sultan Erdogan, as a Mob boss, does seem to heave learned a thing or two from watching Martin Scorsese's Goodfellas. He's extracting the maximum pound of flesh from the bewildered "Don't do Stupid Stuff" team. The Sultan is boldly aiming at Turkish boots on the ground gloriously invading Syria in NATO "humanitarian intervention" mode. And all this sold as NATO offering "protection" to a member-nation. NATO's new secretary-general, former Norwegian Prime Minister Jens Stoltenberg, has just been to Ankara. Saudi Arabia has already "voted" out loud for the "buffer"/no-fly zone. Same for General Francois Hollande, that pitiful excuse for President of France.
Once again, it's Tehran to the rescue. The Foreign Ministry has duly announced Iran is ready to liberate Kobani from The Caliph's goons (and they can do it) if Bashar Al-Assad says the word. Now that's how you work the chessboard; NATO is left with zero excuses to mount an invasion of Syria, whatever Mob Boss Erdogan comes up with.
Operation Hands Off My Toyota
The Caliph also wins big in the "bleeding the Pentagon" department. A single US "strike" against his goons - involving F-15s, F-16s or F-22s - costs up to US$500,000. The Pentagon has just revealed it has spent no less than $1.1 billion against The Caliph since June.
What for? Virtually all the assets being destroyed by American bombing are made in the USA, deployed to the Iraqi army and then duly captured during The Caliph's offensive. So here we have the Empire of Chaos spending a fortune from the US Treasury to smash tanks, Humvees and other gear already paid for by American taxpayers. No wonder taxpayers are fuming. Thus Operation Hands off My Toyota.
Additionally, the Pentagon does not have a clue on how to build its Obama-designed proxy "rebel" force to fight The Caliph (with no US soldiers or marines; only fanatic Wahhabis and assorted mercenaries).
To start with, they have no clue who the hell qualifies as a "moderate rebel". The rabble must be "vetted" - and then sent to, of all places, Saudi Arabia for training. There the guy in charge will be - who else - a Special Ops honcho, Major General Michael Nagata. Even under the most optimistic scenario, the Pentagon won't have its proxy "moderate rebel" army on the ground in Syria before the summer of 2015.
Hefty bottles of Chateau Margaux can be bet that all this prime US weaponized know how will ultimately end up captured by The Caliph's goons. Same applies to reliable "rebel" intel on the ground.
But the real Dadaist masterpiece is that first these "rebels" will be politely asked by the Pentagon to forget about getting rid of Assad to fight The Caliph. At least for a while. Re-enter Stoltenberg, the new NATO head: "Next year, at the ministerial meeting, we will take decisions regarding the so-called spearhead but, even before it is established, NATO has a strong army after all. We can deploy it wherever we want to." OK, tough guy; why not "Syraq"?
If this all sounds like a plot straight out of hit series Blacklist, that's because it is. Why not get Red (James Spader) to fight The Caliph? And then again, what if Red is The Caliph? He pretends to fight himself - and he wins, handsomely. Back to Welles' The Lady from Shanghai: "Killing you is killing myself". Yet nobody could possibly want The Caliph dead when he's such a smashing, undisputed box-office success.
* * *
Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).
Whocouldanode? Chinese GDP managed (thanks to record-breaking credit creation and QE-lite) to beat expectations of +7.2% and come in at +7.3% (still its slowest growth since April 2009). Notably this was the biggest decoupling from Bloomberg's high-frequency economic data forecast (i.e. real data) since May 2010. Despite weakness in Cement and Steel output, Industrial Production also managed to beat and actually improve (another miracle). Retail Sales missed expectations, rose only 11.6% YoY - its weakest since Feb 2006. Initial kneejerk is a lift in USDJPY, AUDJPY, TSY yields, and S&P and NKY futures... but that has now faded...
Chinese GDP beat, falls to slowest since April 2009, and decouples from Bloomberg's "real data" estimate by themost since May 2010...
Industrial production rose and beat - breaking any historical correlation with Steel and Cement industries...
For the 5th month of the last 6, Retail Sales missed and dropped to the slowest growth since feb 2006...
The initial reaction - USDJPY jerked higher, S&P Futs followed along with TSY yields...
But that has now faded...
* * *
China is slowing, mostly due to a gradual, steady decline in private sector activity. One example: the decline in fixed asset investment (e.g., business capital spending) at private sector firms relative to firms that are state-controlled. Premier Li Keqiang’s reforms are aimed at making it easier for entrepreneurs to start private sector firms, but in the current climate, private sector investment growth continues to fall.
The Chinese central bank injected some liquidity into the domestic banking system recently, but it was only for 3 months and not meant to address the more structural issue of declining private sector demand. While export growth and job creation still look pretty good, the overall picture is one of an economy growing at 7%, and that’s with the contribution from government spending. Government spending is set to slow in the second half of the year; the authorities continue to reduce the size of the shadow banking system which extends credit; and the overheated housing market is still in decline as well when looking at national home sales and a 70-city home price average.
We expect continued weakness in Chinese data for the rest of 2014 and into next year as well.
* * *
And we know just how bad that nagover can be (unless the drip of liquidity - and not reforms) is left wide open...
Following last year's 20,000 word "decision" at the 3rd Plenum pledging reforms, soft-landings, and corruption crackdowns, we thought we'd leave it to China's state-owned media to explain - via handy infographic - what to expect from the 4th Plenary session this week...
Submitted by Michael Snyder via The Economic Collapse blog,
Barack Obama and the head of the CDC need to quit saying that we know exactly how Ebola spreads. Because the truth is that there is much about this virus that we simply do not know. For example, a top Ebola scientist that is working in the heart of the outbreak in Liberia says that this version of Ebola looks like it could be "a very different bug" from past versions. Other leading scientists are echoing his concerns. And yet Barack Obama and Thomas Frieden continue to publicly proclaim that we know precisely how this virus behaves. Not only is that bad science, but it could also potentially result in the unnecessary deaths of a very large number of people. For example, Obama has refused to implement an Ebola travel ban because he is greatly underestimating the seriousness of this virus. This decision could turn out to be incredibly costly. If what you will read about below is true, we could be dealing with some sort of "super Ebola" that nobody has ever seen before.
Peter Jahrling of the National Institute of Allergy and Infectious Disease is on the front lines fighting this disease in Liberia. He is one of the top authorities in the world on Ebola, and what his team has been seeing under the microscope is incredibly sobering...
Now U.S. scientist Peter Jahrling of the National Institute of Allergy and Infectious Disease believes the current Ebola outbreak may be caused by an infection that spreads more easily than it did before.
Dr Jahrling explained that his team, who are working in the epicentre of the crisis in the Liberian capital of Monrovia, are seeing that the viral loads in Ebola patients are much higher than they are used to seeing.
He told Vox.com: 'We are using tests now that weren't using in the past, but there seems to be a belief that the virus load is higher in these patients [today] than what we have seen before. If true, that's a very different bug.
'I have a field team in Monrovia. They are running [tests]. They are telling me that viral loads are coming up very quickly and really high, higher than they are used to seeing.
'It may be that the virus burns hotter and quicker.'
Other top scientists are making similar observations.
The following comes from a recent article posted on Washington's Blog...
The head of the Center for Infectious Disease Research and Policy at the University of Minnesota – Dr. Michael Osterholm – is a prominent public health scientist and a nationally recognized biosecurity expert.
Dr. Osterholm just gave a talk shown on C-Span explaining that a top Ebola virologist – the Head of Special Pathogens at Canada’s health agency, Gary Kobinger – has found that the current strain of Ebola appears to be much worse than any strain seen before … and that the current virus may be more likely to spread through aerosols than strains which scientists have previously encountered.
I have posted video of that talk on C-Span below...
But even if we were dealing with the exact same strain of Ebola, that does not mean that our leaders are telling us the truth when they say that it is not an airborne virus.
Just check out the following quotes from top scientists about the spread of Ebola from a recent Los Angeles Times article…
Dr. C.J. Peters, who battled a 1989 outbreak of the virus among research monkeys housed in Virginia and who later led the CDC’s most far-reaching study of Ebola’s transmissibility in humans, said he would not rule out the possibility that it spreads through the air in tight quarters.
“We just don’t have the data to exclude it,” said Peters, who continues to research viral diseases at the University of Texas in Galveston.
Dr. Philip K. Russell, a virologist who oversaw Ebola research while heading the U.S. Army’s Medical Research and Development Command, and who later led the government’s massive stockpiling of smallpox vaccine after the Sept. 11 terrorist attacks, also said much was still to be learned. “Being dogmatic is, I think, ill-advised, because there are too many unknowns here.“
And I have written about this before, but so many people don't know about this that it bears repeating. The following is an excerpt from a news story about a study that was conducted back in 2012 that demonstrated that the Ebola virus can be transferred from one animal to another animal without any physical contact whatsoever...
When news broke that the Ebola virus had resurfaced in Uganda, investigators in Canada were making headlines of their own with research indicating the deadly virus may spread between species, through the air.
The team, comprised of researchers from the National Centre for Foreign Animal Disease, the University of Manitoba, and the Public Health Agency of Canada, observed transmission of Ebola from pigs to monkeys. They first inoculated a number of piglets with the Zaire strain of the Ebola virus. Ebola-Zaire is the deadliest strain, with mortality rates up to 90 percent. The piglets were then placed in a room with four cynomolgus macaques, a species of monkey commonly used in laboratories. The animals were separated by wire cages to prevent direct contact between the species.
Within a few days, the inoculated piglets showed clinical signs of infection indicative of Ebola infection. In pigs, Ebola generally causes respiratory illness and increased temperature. Nine days after infection, all piglets appeared to have recovered from the disease.
Within eight days of exposure, two of the four monkeys showed signs of Ebola infection. Four days later, the remaining two monkeys were sick too. It is possible that the first two monkeys infected the other two, but transmission between non-human primates has never before been observed in a lab setting.
So when Barack Obama and Thomas Frieden get up and tell us that they know with 100% certainty that Ebola is not airborne, they are lying to you.
There is so much about this outbreak that we simply do not know.
Our public officials should be honest about that.
Instead, it seems like they are flying by the seats of their pants and just saying whatever they think will keep everyone calm.
We are potentially facing the greatest health crisis of this generation, and bad science and false assurances are not going to help anyone.
Sadly, Barack Obama just continues to make bad decision after bad decision. This includes his very foolish decision to send thousands of U.S. troops right into the heart of the Ebola death zone.
Troops from the 101st Airborne Division leading the military response to Ebola in West Africa will only need gloves and masks to protect themselves from the deadly virus, so said Gen. David Rodriguez at a Pentagon briefing Wednesday.
“They don’t need the whole suit – as such – because they’re not going to be in contact with any of the people,” the commander of U.S. troops in Africa said.
Soldiers from the 101st Airborne will primarily be building hospitals, ultimately leading what could be a contingent of 4,000 American service members. They’ll be housed either in tent cities at military airfields or in Liberian Ministry of Defense facilities, Rodriguez said.
Soldiers’ health will be monitored through surveys and taking their temperature on their way in and out of camps. If a service member does get sick, Rodriguez said they will be flown home immediately for treatment.
Who is going to be held accountable when these young men and women start coming home sick?
So far the federal response to this Ebola crisis has been a parade of incompetence.
And yet we continue to be told that "everything is under control".
I don't know about you, but I have a bad feeling about all of this.
Amid two (notably female) resignations this weekend (Justice Minister Matushima and Trade Minister Obuchi for alleged misuse of political funds), Abenomics tilt towards women as a pillar of the Japanese recovery is taking yet another blow, removing "one of his ways of distracting people from his less popular policies." However,it is Japan's Economy Minister, Akira Amari, that went full economic retard this weekend - having learned well from his wise American central-planning brethren. Rather than face reality that Abenomics currency devaluation printfest has crushed the consumer beyond all expectations (as we noted since the start and Goldman just admitted), he blames the weather for economic weakness: "including the effects of large typhoons and heavy rains in July and August, Japan’s 3Q economic situation is probably not a strong recovery."
As Bloomberg reports,
After nearly two years without a single resignation from Japanese Prime Minister Shinzo Abe’s cabinet, two female ministers stepped down on the same day.
Yuko Obuchi, trade and industry minister, resigned over allegations of improper use of political funds, and Justice Minister Midori Matsushima, 58, quit over claims she breached election laws. The resignations are a double blow to Abe who has made promoting women a pillar of his economic policy.
The resignation of the two ministers “one of his ways of distracting people from his less popular policies is no longer a distraction.”
But that's the least of Abe's worries as the economy flounders back towards recession and moar QQE is untenable... (as we explain here)
“Including the effects of large typhoons and heavy rains in July and August, Japan’s 3Q economic situation is probably not a strong recovery,” Japanese Economy Minister Akira Amari writes in a post on his website.
Amari: “Unless there is really strong data in September, we will have to decide on a stimulus package to return the economy to the growth path, with this delinked from the decision on the sales-tax increase”
Amari: It’s better to decide on a further sales tax increase as early as possible so compilation of next year’s budget not left unfinished at the end of this year
Amari: Prime Minister Shinzo Abe’s advisory panel which will examine the current economic situation will be held over a few days before and after the announcement of preliminary 3Q GDP on Nov. 17
Opposition has pointed out miscalculation and misconceptions of Abenomics.
Exports does not extend to a weaker yen, real wages Toka are going down, and have contributed more negative than positive, rather than a break from the deflation, the depreciation of the yen has caused a recession, stagflation of inflation
Exports due to the depreciation of the yen has not yet been been growing as expected and is a miscalculation, to be sure
* * *
For those banking on moar flow from the BoJ, think again.
Submitted by Jim Quinn via The Burning Platform blog,
The Walking Dead reflect the darkening mood of this intensifying Fourth Turning. I wrote one of my more pessimistic articles called Welcome to Terminus in April regarding the season four finale of the Walking Dead series. I essentially argued we are approaching the end of the line and the world is going to get real nasty.
In the six short months since I wrote that depressing article, we’ve seen men beheaded on Youtube videos by terrorists no one had ever heard of at the beginning of this year. Somehow a ragtag band of 30,000 Muslim terrorists, using American military equipment supplied to fight Assad in Syria and taken from the Iraqi Army when they turned tail and ran away, have been able to defeat 600,000 Iraqi and Kurd fighters with air support from the vaunted U.S. Air Force. Syria, Iraq, Libya, and Afghanistan descend into never ending religious based warfare. We’ve even had passenger planes mysteriously disappear in Asia with no trace.
Crimea seceded from Ukraine and rejoined Russia, initiating a plan to punish Russia by the western powers. America supported and planned the overthrow of a democratically elected government in the Ukraine, with a predictable push back response by Russia, leading to a bloody civil war in the Eastern Ukraine. We’ve had a false flag shooting down of an airliner over the Ukraine by the Ukrainian government, blamed on Russia and Putin by Obama and his EU co-conspirators. The American corporate media mouthpieces have ignored the cover-up of missing controller transmissions, black box recordings, and physical evidence regarding the murder of hundreds of innocent people by western politicians. Israel and Hamas resumed their endless religious war in Gaza, with thousands of casualties and destruction.
UK fear mongering and financial threats barely averted the secession of Scotland from the UK. Cantalonia continues to push for a secession vote to leave Spain. Violent protests have broken out in Spain, Italy, France and even Sweden. Turmoil, protests and riots in Brazil, Venezuela, Argentina and Mexico have been driven by anger at political corruption, high inflation, and general economic dysfunction. Saber rattling between China and Japan has increased and young people in Hong Kong have been protesting the lack of democratic elections being permitted by China. The world economy, undergoing central bank monetary stimulus withdraw, is headed back into recession as Germany, China and the U.S. join the rest of the world in economic decline. And now the Western Africa outbreak of ebola has gone worldwide, with predictions of an epidemic potentially causing worldwide economic chaos.
What’s happening in the real world makes the dystopian zombie world of Walking Dead seem almost quaint. The writers of this show brilliant use of symbolism and imagery captures the violent, chaotic, inhumane, darkening, brutal world we inhabit as the Fourth Turning crisis period we entered in 2008 deepens on a daily basis. There is a good reason why the first episode of their fifth season drew the biggest cable TV audience in history. The show is clearly tapping into the mood of the masses. Early in the latest episode you realize Terminus has become a processing center run by cannibals. The line between victim and criminal, killer and prey, good and evil, madness and sanity, and moral and immoral is blurred. Everything is relative in the post-pandemic world of the Walking Dead.
Seeing Wall Street cannibals walk away unscathed after devouring the worldwide economic system in 2008 with their fraudulent financial schemes, corrupt politicians enriched by throwing taxpayers under the bus, militarized police forces trampling the Fourth Amendment, the NSA spying on every American, a private central bank enriching their owners by funneling trillions into their bank vaults, a president trampling on the Constitution by issuing executive orders to bypass the other branches of government, and billions of welfare and tax fraud from the urban ghettos to the penthouse suites in NYC, has convinced a large swath of Americans that everything is relative and nothing matters in our warped dystopian world. Right and wrong no longer matter. Morality is an antiquated concept. Adhering to the Constitution is an outmoded notion. Our society celebrates and condones our dog eat dog economic paradigm. Or zombie eats anything world in the case of Walking Dead.
The Terminus complex is reminiscent of the concentration camp in Schindler’s List. It is complete with railroad cars to hold the prisoners, gates with barbed wire, armed guards, and extermination facilities to “process” the prisoners. Thick black smoke belches into the air. There is a room stacked full of booty, teddy bears, watches, clothes – everything except the gold fillings.The Nazi like precision and attention to detail is reflected in the almost business-like method in which the Terminus administrators go about gutting their prey. The bone chilling efficiency and antiseptic processing facility evoke memories of the holocaust gas chambers. The opening sequence when Rick, Daryl, Glenn and Bob are among a group of men lined up to be gutted like pigs over a trough in place to collect their spilled blood, might have been the most brutal scene ever put on non-premium cable TV.
The callous and dispassionate way in which the prisoners (cattle) are lined up in front of a stainless steel trough is disconcerting and bone chilling. The victims are hit with a baseball bat and then their throats are slit over the trough by men in protective suits. They have become nothing but cattle to be butchered and consumed by the Terminus cannibals. You see another part of the processing plant where human remains are hanging from hooks like sides of beef. Gareth, the leader of Terminus, supervises the operation like a CEO, berating the butchers for not meeting quotas and following standard operating procedures. Not much different than how our mega-corporations are run today.
The other fascinating similarity between the dystopian “nightmare of want” setting of Terminus and our modern day dystopian “empire of excess” is the use of false advertising and propaganda to lure “customers” into their web. Their version of billboard advertising has plywood with the hand written messages of “Sanctuary for All”, “Community for All”, and “Those Who Arrive Survive”. The Terminus cannibals would have fit in well on Madison Avenue with the highly paid spin artists, propagandists, and whores for the corporate oligarchs.
The signs along train tracks and radio transmissions from a call center like facility showed the calculated business-like efficiency of the cannibals in systematically and methodically luring victims to their slaughterhouse. It is the same techniques used by the apostles of Edward Bernays to consciously and intelligently manipulate the habits, opinions, tastes, ideas and actions of the masses, in order to control and influence their buying habits, voting decisions, and support of their rulers. The unseen men who constitute the “invisible government” use these techniques to keep the cattle docile, fed, and ignorant, as they are led to slaughter.
The government and lack thereof is always lurking in the murky background of how and why the United States has devolved into an infected world of the walking dead. This episode provided some clues about government labs producing viruses as weapons to be used against some unexplained enemy. The insinuation is that the government somehow lost control of the virus and the ensuing pandemic destroyed our modern world and left the survivors to battle the biters and each other for the remaining scraps. The Federal government caused the societal collapse and is nowhere to be found in rebuilding the nation.
It is unclear how the apocalypse went down, but you can assume it began with fear, which led to panic, chaos, economic collapse, violent upheaval, war, and total breakdown of governmental authority and control. It is ironic that today fear of a worldwide ebola pandemic is coinciding with an inevitable economic implosion, wars raging in te Middle East, violent protests raging around the globe, and trust in governmental authority plunging to all-time lows. The Walking Dead has wittingly or unwittingly captured the ambiance of our turbulent times.
When you are faced with desperate circumstances you can either do whatever you need to survive or you can submissively accept your fate and die. Gareth and his cannibalistic cohorts had been in the same situation as Rick and his posse, but they had somehow turned the tables on their captors. Gareth’s survival of the fittest creed was “either you’re the butcher or you’re the cattle”. Human beings react to intense pressure and life threatening situations in different ways. Some people snap and turn into monsters, like Gareth. Some people snap and lose their minds. Others, like Rick and Carol, summon an inner strength to do whatever it takes to survive while barely maintaining their humanity. Others turn into blind followers of a strong forceful leader, not questioning the morality, legality or humanity of what they are ordered to do. The line between right and wrong, necessary versus unnecessary, vengeance versus justice, and butcher versus cattle is blurred in a world without rules, government or accepted norms.
I believe the “butcher or cattle” analogy is sadly a valid meme for the world we currently inhabit. In the Walking Dead world, individuals must choose to be butcher or cattle. It’s a Darwinian world of kill or be killed. Like minded individuals with common values and goals form communities to protect themselves, provide for themselves, and attempt to bring a semblance of order in a chaotic world. The community of Westbury, led by the governor and the community of Terminus, led by Gareth, are founded upon a foundation of evil and ultimately destroyed. Rick’s community of liberty minded freedom fighters do whatever is necessary to survive, but retain their humanity, decency and desire to create a better world.
Our present day world may not be as brutish as the Walking Dead world, though the line between reality and fiction is often indistinguishable when you turn on the news, but the distinction between butchers and cattle is clear. The elected and non-elected rulers of the deep state are the butchers, sending young men off to die for oil companies and arms dealers, impoverishing the masses through inflation and their control of the currency, and enriching themselves through their complete control of the political, financial, judicial, and economic systems. This establishment, or invisible government as Bernays described, is committed to its own enrichment and perpetuation. Its scope, financial resources, and global reach put it in a predator class all by itself.
The common people are the cattle being led to slaughter. We are kept docile with incessant propaganda from the mainstream media; marketing messages to consume from Madison Avenue; filtered, adjusted, manipulated economic data fed to us by government agencies; an endless supply of iGadgets and other electronic distractions; government education designed to keep us ignorant; 24/7 reality TV on six hundred stations to keep us entertained; corporate toxic processed food to keep us obese and tame; and an endless supply of Wall Street supplied debt to keep us caged in our pens with no hope of escape. The butchers of the deep state have maintained control for decades, but we’re entering a new era.
Fourth Turnings result in the tables being turned on the butchers. Some cattle are awakening from their stupor. They can see the bloody writing on the slaughterhouse wall. Anyone who isn’t sensing a dramatic mood change in this country is either a mindless zombie or a functionary of the deep state. The financial shenanigans of the ruling class are again being revealed as nothing but a Ponzi scheme built on a foundation of debt and propped up by delusions and ignorance. When the house of cards collapses in the near future, the tables will turn. When people have nothing left to lose, they will lose it. The butchers will become the cattle. There will be no sanctuary for these evil men. Their reign of terror will be swept away in a whirlwind of retribution, death and destruction. It might even make the Walking Dead look like a walk in the park.
Three months ago, the CEO of Total, Christophe de Margerie, dared utter the phrase heard around the petrodollar world, "There is no reason to pay for oil in dollars," as we noted here. Today, RT reports the dreadful news that he was killed in a business jet crash at Vnukovo Airport in Moscow after the aircraft hit a snow-plough on take-off. The airport issued a statement confirming "a criminal investigation has been opened into the violation of safety regulations," adding that along with 3 crewmembers on the plane, the snow-plough driver was also killed.
— RT (@RT_com) October 20, 2014
De Margerie, 63, joined Total in 1974 after graduating from the École Supérieure de Commerce in Paris. He served in several positions in the Finance Department and Exploration & Production division. In 1995, he became President of Total Middle East before joining the Total's Executive Committee as the President of the Exploration & Production division in May 1999. In May 2006, he was appointed a member of the Board of Directors. He was appointed Chairman and Chief Executive Officer of Total on May 21, 2010.
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According to preliminary data, the light aircraft collided with a snow-cleaning machine on takeoff, a source at the capital’s airport told RIA.
The aircraft was sending distress signals while still in the air and reporting an engine fire and fuselage damage, LifeNews reports. Upon crashing on the runway, the aircraft was engulfed in flames, reportedly killing everyone on board.
While initials reports suggested four people died in the tragedy, officials report that five bodies were found at the crash site, one allegedly being the driver of the snow-cleaning vehicle.
Vnukovo Airport has temporarily suspended all flights following the incident.
“A criminal investigation has been opened into the violation of safety regulations after a light aircraft crash in the capital's Vnukovo airport,” transport official Tatyana Morozova told RIA.
An investigative group is working at the crash site, Morozova added. In addition to people who were on board the plane, she said, the driver snowplow was killed.
Debris from the aircraft was scattered up to 200 meters from the crash site, according to the rescue services. The engine was found some 50 meters from the crash site, while one of the landing gears was ripped off and discovered nearly 200 meters from the main mass of debris.
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The plane he was aboard...
— RT (@RT_com) October 20, 2014
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Of course this could merely be a desparately sad accident... aside from the coincidence of this so recently...
Christophe de Margerie, the CEO of Total (the world's 13th biggest oil producer and Europe's 2nd largest), believes "There is no reason to pay for oil in dollars." Clearly, based onhis comments, that we have passed peak Petrodollar.
Oil major Total's chief executive said on Saturday the euro should have a bigger role in international trade although it was not possible to do without the U.S. dollar.
Christophe de Margerie was responding to questions about calls by French policymakers to find ways at EU level to bolster the use of the euro in international business following a record U.S. fine for BNP.
"There is no reason to pay for oil in dollars," he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.
So even a major beneficiary of the status quo appears to see the end in sight for the Petrodollar.
* * *
Furthermore, despite Western-imposed sanctions on Russia that prohibit western financing and technology transfer to some Russian energy projects, Total is continuing to pursue a natural gas project in Yamal, a joint venture with Russia's Novatek and China's CNPC.
“Can we live without Russian gas in Europe? The answer is no. Are there any reasons to live without it? I think – and I'm not defending the interests of Total in Russia – it is a no,” the Total boss told Reuters back in summer.
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And of course, it had to happen in Russia!
US Army withheld promise from Germany that Ebola virus wouldn’t be weaponized
German High Government Official Seeks Washington’s Reassurance that the US did Not Weaponize the Species of Ebola that Germany Made Available to Washington
Washington has not provided the reassurance. By providing the virus to Washington prior to effective reassurances, Germany is complicit in the breakout of a bio-warfare grade of ebola, which has now spread to the US and Europe.
At this point, it is not clear that this ebola strain will be contained or whether Washington has any intention or ability to contain it. The arrogance and inhumanity of Washington is beyond comprehension.
US Army withheld promise from Germany that Ebola virus wouldn’t be weaponized
Published time: October 20, 2014 17:17
The United States has withheld assurances from Germany that the Ebola virus – among other related diseases – would not be weaponized in the event of Germany exporting it to the US Army Medical Research Institute for Infectious Diseases.
German MFA Deputy Head of Division for Export Control Markus Klinger provided a paper to the US consulate’s Economics Office (Econoff), “seeking additional assurances related to a proposed export of extremely dangerous pathogens.”
Germany subsequently made two follow-up requests and clarifications to the Army, according to the unclassified Wikileaks cable.
”This matter concerns the complete genome of viruses such as the Zaire Ebola virus, the Lake Victoria Marburg virus, the Machupo virus and the Lassa virus, which are absolutely among the most dangerous pathogens in the world,” the request notes.
“The delivery would place the recipient in the position of being able to create replicating recombinant infectious species of these viruses,” the cable notes.
However, it also points out that Germany has in place an “exceptionally restrictive policy,” adding that approval would not be granted to the export until US assurance was provided.
”A decision about the export has not yet been made. Given the foregoing, we would appreciate confirmation that the end use certificate really is from the Department of the Army and of the accuracy of the data contained therein,” the document stated.
There is no follow-up document available to confirm whether the US Army eventually provided Germany with the necessary guarantees. Bioweapons were outlawed in the Biological Weapons Convention of 1972 and was signed and ratified by 179 signatories, including Germany, the US and Russia.
It dictates that signatories, “under all circumstances the use of bacteriological (biological) and toxin weapons is effectively prohibited by the Convention” and “the determination of States parties to condemn any use of biological agents or toxins other than for peaceful purposes, by anyone at any time.”
The post US Army withheld promise from Germany that Ebola virus wouldn’t be weaponized appeared first on PaulCraigRoberts.org.
With Ron Klain now not expected to start his reign as Ebola Czar until Wednesday (we assume he has some other deadly pandemic virus to take care of before switching over), The White House has just one message for the world...
CIA Warned Obama that Funding Rebels Doesn’t Work … But Obama Decided to Fund Syrian Rebels ANYWAY For Cynical Political Gain
Painting by Anthony Freda.
We’ve pointed out for years that arming the Syrian and Libyan rebels to topple leaders we don’t like is a really stupid idea.
It turns out that the CIA agrees with us.
The New York Times reports:
The Central Intelligence Agency has run guns to insurgencies across the world during its 67-year history — from Angola to Nicaragua to Cuba [to Syria].
An internal C.I.A. study has found that it rarely works.
The still-classified review, one of several C.I.A. studies commissioned in 2012 and 2013 in the midst of the Obama administration’s protracted debate about whether to wade into the Syrian civil war, concluded that many past attempts by the agency to arm foreign forces covertly had a minimal impact on the long-term outcome of a conflict. They were even less effective, the report found, when the militias fought without any direct American support on the ground.
The findings of the study, described in recent weeks by current and former American government officials, were presented in the White House Situation Room and led to deep skepticism among some senior Obama administration officials about the wisdom of arming and training members of a fractured Syrian opposition.
“One of the things that Obama wanted to know was: Did this ever work?” said one former senior administration official who participated in the debate and spoke anonymously because he was discussing a classified report. The C.I.A. report, he said, “was pretty dour in its conclusions.”
Mr. Obama made a veiled reference to the C.I.A. study in an interview with The New Yorker published this year. Speaking about the dispute over whether he should have armed the rebels earlier, Mr. Obama told the magazine: “Very early in this process, I actually asked the C.I.A. to analyze examples of America financing and supplying arms to an insurgency in a country that actually worked out well. And they couldn’t come up with much.”
Last month, Mr. Obama said he would redouble American efforts by having the Pentagon participate in arming and training rebel forces.
Dan Froomkin – an investigative journalist with the Washington Post, HuffPost and now First Look (and a Democrat) – slams Obama for deciding to arm Syrian rebels even after the CIA told him it wouldn’t work, in an article entitled “Obama Knew Arming Rebels Was Useless, But Did It Anyway“:
He knew better, but he did it anyway.
Bush at least thought the war in Iraq would do some good.
He was incredibly wrong, mind you. He was both delusional — and actively manipulated by neocons like Dick Cheney (who believe the application of American power is always and inherently a good thing). He intentionally misled the public about his real reasons for going to war (the terrorist attacks of 9/11 were an excuse, not a reason; there were no Iraqi weapons of mass destruction). His eventual goal was both unachievable (a sudden flowering of pro-Western democracy in the Middle East) and perverse (American control of Iraqi oil fields). His methods (firing all the Baathists; trying to install a corrupt puppet) were spectacularly misguided. Much of the rest of his presidency was consumed with sectarian warfare in Iraq and new lies to cover up the old ones at home. And the end result was a massive human rights catastrophe, including torture of U.S. detainees, a refugee crisis, mass casualties, social disorder and – finally – the Islamic State.
Bush also certainly saw – and exploited — the political upside of being a war president.
But [at least Bush] didn’t let loose the dogs of war simply because his political operatives told him it would poll well.
In response to embarrassment caused by the revelation that Obama agreed to arm the Syrian rebels after the CIA warned him it wouldn’t do any good, the U.S. military is now saying they won’t work with the Syrian rebels.
Specifically, General Allen – the head of America’s anti-ISIS campaign – now says that the administration now has no plans to ever coordinate with the Free Syrian Army (FSA) or any other of the existing rebel factions. He says they’ll only work with a new coalition of “moderate” rebels.
Submitted by Patrick Barron via Mises Canada,
The economic phenomenon known as the “Tragedy of the Commons” instructs us that commonly held resources that are insufficiently protected will be plundered to extinction. The phenomenon was recognized in the early nineteenth century to explain why the commons in England quickly came to be denuded by sheep. All sheepherders had an equal right to graze sheep on the commons. There often was no agreement as to how many sheep each could graze, so it was sheer rational self-interest for each to graze as many sheep on the common ground as possible. In short order the commons came to be overgrazed. What later came to be called “the tragedy of the commons” was a simple and imminently understandable explanation.
Is security an economic resource?
One can easily accept that grassland is an economic resource that must be protected, but what about security and, if security is held collectively, can collective security agreements also be vulnerable to the tragedy of the commons? Security is a service that usually requires economic resources. We secure our personal possessions when we take precautions such as padlocking our bicycles, locking our car doors and the house, buying monitored security systems, purchasing heavy safes, and the like. These are all economic goods to secure our personal property. But what about protecting our physical selves? It is on a somewhat different plane but the purpose is the same. We may carry concealed weapons, take personal self-defense courses, or hire personal body guards. All these things require the expenditure of time and money to acquire economic goods to make us more secure. On a more subtle level, we modify our behavior to avoid giving offense to complete strangers about whom we know nothing. We especially do not deliberately seek confrontations over minor things like the last parking spot in the lot. Similarly we avoid dangerous parts of town or parts of town that are dangerous at night or on special occasions. For example, my wife and I were in downtown Chicago in the late 1990’s when the Chicago Bulls professional basketball team was winning the NBA championship. We were not fans and gave little thought to the fact that there might be what we shall call “excessive celebrations” after the final victory. As we strolled downtown Chicago after dinner we were advised by a Chicago policeman to leave, because the “excessive celebrations” often became excuses for certain people to behave criminally. Rather than assert our right to window shop whenever and wherever we darned-well pleased and discretion being the better part of valor, we went home. This aspect of security–i.e., avoiding unnecessary confrontation– is often overlooked.
Collective security brings in economic problems
Ah, but would we have reacted the same way had we been in a group? Perhaps we would have felt more secure to window shop by assuming that others in the group would protect us. Our behavior would have changed to become a bit more willing to take risk due to an implicit assumption of collective security. This willingness to take more risk because others may bear some or even all of the cost is known as moral hazard.
So we see that providing our own personal security of our physical bodies and our possessions requires that we expend resources that perhaps we would rather employ elsewhere. We pay for these ourselves and we modify our behavior to avoid the necessity of employing them with uncertain result and to minimize the cost.
But all this changes under collective security agreements.
Moral hazard and socialism cause a tragedy of the commons in collective security
Under a collective security agreement, all who join are obligated to provide security to all others in the alliance. Each member must expend resources to provide such security, which naturally means sacrificing the satisfaction of other preferences.
However, since all contribute to the security pot, all know that their individual sacrifice may be claimed by others. Therefore, there will be a reluctance to spend resources on security that may be used by others, while encouraging, at least to some extent, claims upon security that one would not have made in the absence of the security agreement.
The latter phenomenon, the increased willingness to call upon alliance members, is moral hazard at work and the former phenomenon, the reluctance to expend resources that may be claimed by others, is a well-known consequence of socialism.
Mises explained that socialism discourages production while it increases demand. Why produce only to be forced to share with others when one can demand to share in the production of others without regard to having previously produced something of value to those same others? Eventually all altruism vanishes in a sea of cynicism and nothing is produced for anyone to share. The result is a tragedy of the commons fed by moral hazard and socialism.
The tragedy of NATO
Today we see the above destructive economic forces at work in NATO expansion. When the Soviet Union disintegrated in 1990, the reason for NATO’s existence vanished. But rather than declare NATO to have been a success in deterring war in Europe, possibly disbanding the alliance and building a new Concert of Europe that would include Russia, NATO bureaucrats set about to expand the alliance to the east. Whereas the Concert of Europe after the Napoleonic Wars had quickly embraced France as an important member, NATO expanded to isolate Russia by absorbing its former satellite nations.
The last NATO expansion prior to the disintegration of the Soviet Union had occurred in 1982 when Spain joined the alliance. At that point in time NATO was composed of sixteen nations. Starting in 1999 twelve countries have joined NATO, ten of them former members of the Warsaw Pact. The other two, Slovenia and Croatia, were previously part of Yugoslavia, officially a non-aligned nation, but a communist dictatorship all the same. With the possible exception of Poland, none of these new members contribute much to the alliance’s military capability, meaning that the older members are shouldering their security burden. Naturally expanding NATO to the east has resulted in isolating and antagonizing Russia, who feels its security threatened. So, NATO has succumbed to the socialist phenomenon by adding new members who demand security without much of an obligation and to the moral hazard phenomenon by adding new members whose territories could be used to house American nuclear weapons, a situation that may yet provoke a major world crisis with Russia, which is precisely what NATO was formed to avoid.
Ukraine and Finland as examples of moral hazard and socialist demands
Both Ukraine and Finland are lobbying NATO for membership. President Poroshenko of Ukraine is lobbying for membership in both the European Union and NATO. The fact that Russia already has taken the Crimea following anti-Russian riots apparently means nothing as long as Ukraine believes that mighty NATO will intervene on its behalf. If NATO did admit Ukraine, one wonders if Ukraine would invoke the collective security clause and demand that NATO go to war with Russia. Finland is already a member of the EU and now is openly lobbying for NATO membership. In a recent interview with der Spiegel, Finnish president Alexander Stubb was dismissive of Russia’s stated concerns about Finland joining NATO. His interview has to be read to be believed. Both presidents’ behavior illustrate the moral hazard nature of collective security agreements. And neither country would contribute anything to the security of current NATO members. On the contrary, Ukrainian and/or Finnish membership would cause an escalation in tensions in Europe and take us right back to the Cold War…or worse! Neither country considers the possibility that NATO might not honor its military commitment. It is one thing for NATO bureaucrats to admit new members. It is another thing for current members to expend blood and treasure, especially when the possibility of nuclear war is wafting through the air. Does anyone remember the Cuban Missile Crisis?
In conclusion, due to the inherent problems with collective security alliances–tragedy of the commons fed by socialism and moral hazard–nations should enter into them with great caution. George Washington’s farewell address has never sounded more prescient: Beware foreign entanglements.
With the AAPL EPS whisper number pointing to an EPS somewhere about 10-15 cents above the EPS consensus of 1.30, moments ago AAPL did not disappoint and reported Q4 EPS of $1.42, a solid 12 cent beat to expectations, a comparable beat to the top line beat, with $42.12 billion in revenue, also well above the $39.9 Bn estimate. The gross margin of 38% was right on top of expectations. In terms of product breakdown, AAPL sold 39.3 million iPhones, above the 38 million expected, with Mac unit sales of 5.52 million also above the 4.84 million expected, with only iPad sales of 12.3 million missing the 13.0 million estimate.
Here is AAPL's guidance for Q1 2014 :
- revenue between $63.5 billion and $66.5 billion, Est. $63.5 billion
- gross margin between 37.5 percent and 38.5 percent, Est. 38%.
- operating expenses between $5.4 billion and $5.5 billion
- other income/(expense) of $325 million
- tax rate of 26.5 percent
For those looking at cash, in fiscal 2014, AAPL generated $59.7 billion in cash from operations, spending $22.6 billion on investing actvities (down from $33.8 billion a year ago), and the remainder was $37.5 billion spent on on common stock and dividends, offset by $12 billion in long-term debt and $6.3 billion in commercial paper. The last is interesting as in 2013 had zero under commercial paper.
Finally, those wondering how much stock AAPL bought back, the answer is $17 billion, which brings the total for 2014 to $45 billion, double the $22.9 billion repurchased in fiscal 2013. This was funded by a combination of cash on hand, which declined to $155 billion, or $9 billion from the previous quarter, even as net cash (excluding debt) declined to $120 billion, the lowest since Q3 2012.
Here is the visual breakdown.
Total cash (keep in mind domestic cash is now a tiny fraction of the total):
And cash, net of long-term debt and commercial paper:
But the strangest chart of all: AAPL's short-term marketable investments, tumbled from $24.8 billion to $11.2 billion, the lowest since Lehman. Did AAPL just call a market top? The question is in what: Bills or whatever stocks it is that the "world's largest hedge fund you have never heard of" has invested in?
Submitted by Adam Taggart via Peak Prosperity,
Recently, an article by Daniel Amerman caught our attention. Titled Is There A “Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings?, it details the process known as financial repression, where sovereign debts are slowly paid off by syphoning private savings from an unaware populace.
In this week's podcast, Chris discusses the mechanics of the process, as well as its probability, with Dan:
To understand financial repression, we have to understand that we've been there before. Many nations have gone through periods in the past where they've had very high levels of government debt. And there are four traditional ways of dealing with that.
One of them is austerity. Everyone understands that. You raise the tax rates. You lower the government spending. This is a painful choice. It can last for decades. And what do you think the voters think about that?
There is another option and this we can call this the Argentina option. And that's defaulting on government debts. It’s radical. Everybody understands it. How do the voters feel about it?
There is a third option is rapidly destroying the value of currency. Creating high rates of inflation that very quickly wipe out the true value of a national debt. But that also wipes out the true value of everyone else’s savings and salaries and so forth. It is such an obvious process you can’t really hide it. So how do the voters feel about that?
Those first three – they all work. They've all been done before. But they're all very painful and make the voters very angry.
Now there is a fourth way of doing this. There's nothing controversial about its existence; it's not the slightest bit controversial for professional economists or people who have studied economics extensively. It's financial repression. And it works. It's what the advanced western nations did after World War II. It was a process that took 25 to 30 years, depending on the country. The West went from an average debt as a percentage of national economy from over 90% to under 30%. So we know it works in practice.
To understand what this fourth alternative is where governments like to go is that there are no political repercussions. It's actually just as painful for the population as a whole. You've got to get the money one way or another. But financial repression is, for most people, just complex enough that the average voter never gets it. And because they don’t get it, they're paying the penalty, but they don’t realize it. And they don't see anyone to blame. That's really good if you want to stay in office.
The key is a concept called negative real interest rates. If the rate of inflation is higher than the interest payments you are taking in, savers are losing purchasing power every year. Remember, this is a zero sum game between the borrower and the saver -- with the saver funding the borrower. Every dollar in purchasing power that the savers, which are you and I, are losing every year -- that goes to the benefit of the borrower, which in this case is the Federal government.
Click the play button below to listen to Chris' interview with Daniel Amerman (56m:04s):
Seriously folks, enough. We’ll start slow. Interventions are not as palatable as they once were
FACT: The size of the US consumer base is approximately 11 Trillion Dollars per annum. That is the equivalent to China’s and Japan’s GDP, combined minus a mere 2 Trillion. The size of the US Consumer is 1/3 of the Global Consumer Market. More than Japan, more than EU, more than China.
Let me say this before opinions start flying like the Luftwaffe over Poland: It Is our G-D given right to enjoy the products we purchase and use our reward based credit cards to buy them. Now that we have that out in the open. Let us move on.
So we know that we are a consumer based economy, right? Yes. $11 Trillion is about 70% of the overall economy. We love our products and we love to get new products. I don’t have the actual data, but the churn rate on new products must be in the range of 18 – 26 months. Think Iphone.
Scenario that is impossible to implement but interesting to consider: The US consumer stops buying anything outside of food, Water, and Gas. No new cars, no new technology, no new clothes. Never going to happen, right? Correct.
Our next point, if you had the opportunity to cater to an economy that is falling over itself in its attempt to get the latest and greatest, would you? No brainer category.
We told you we would start slow, so let’s step it up a bit.
The US economy is able to sustain itself from Aunt Janet and her predecessor uncle Ben. Don’t forget our long lost cousin Alan. The US, with one of the highest bond ratings in the known universe, is able to borrow $ at the lowest rates since the Great Depression. See chart.
We use the $ borrowed from the Treasury Auctions to supply the feeding frenzy provided by the Fed. Pretty straight forward, right? Kind of.
The treasury market is approximately $11.8 Trillion dollars. Foreign money holds approximately $6 Trillion on an annual basis. This is a mix of short term and long term securities. As of August 2014, China’s US Treasury holdings were at$ 1.269 Trillion. So no, China does not hold half of our Treasuries.
Treasuries are denominated in USD. In order for Foreign investors to buy T-Bills, T-Notes, T-Bonds, conversions into the USD would need to take place. Thereby, selling the foreign currency and purchasing the US dollar. Providing strength in the USD and, for the moment, weakness to the foreign currency. Selling the currency X, buying the USD. Multiply this by the steady stream of interest in the US Treasuries and you experience a rising tide in the US currency. US based consumers are able to purchase goods manufactured in international locations cheaper without sacrificing domestic purchasing power. Conversely, foreign based companies and consumers would experience more expensive goods when purchasing US products.
WIFC: What’s In It For China? This is where things get interesting. The common contention is that China is allowing the US to continue its spending spree until all-heck breaks loose. We feel a bit differently.
What if the Chinese would like to make sure that the Yuan fluctuation, which is seemingly regulated by the government, remains low for the benefit of the Chinese? The Chinese are merely looking for a pathway to keep the currency low to promote the goods produced in China as financially attractive as possible. With some esoteric currency plays and good ole fashioned financial engineering, it’s possible and already in play.
This turning out to be a more of a currency play than just a macroeconomic motif. China needs to stay relevant. This isn’t about the US and its consumers but about the Chinese desire to create a relevant economy and more relevant presence on the world economic stage.
If China does not purchase USD based securities the probability that the US $ will not continue its buoyancy will decrease. When USD buoyancy exists the picture, the purchasing power of the US consumer will decrease in relation to its foreign supplier. The Supplier and Manufacturer in China will immediately feel the impact in the decrease in demand for the product. In turn, more intervention will need to take place to keep the Yuan by the Chinese government.
We need to remember that the US need not be the focus of these discussion. The focus should be on the Chinese manufacturing and supply chain integrity. This bring to light the true implication of currency movements and asset purchases.
The reason the US is at the center of this discussion on a global scale is the fact that we refuse to stop spending. Perhaps this is more of a philosophical than a fiscal, monetary, or economic discussion.
For what it’s worth, I like my crack.
If only stock indices only included stocks that were green... IBM's 80-point weight on the Dow disappointed some but that was no problem for the index-pushers who needed the S&P 500 to tap its 200DMA. The only thing that mattered to stocks today was EURJPY... and that managed to get the S&P 500 'almost' to its 200DMA (but noit quite) and ensure a green close for the Dow. The USDollar slipped lower all day (-0.4%) led by EUR and GBP strength. Gold ($1245) and silver gained on the day but even with a weak USD, oil and copper dropped (with oil very volatile). US Treasury yields drifted lower by 1-2bps (thin trading) decoupling from the post-European close exuberance in stocks. HY credit decoupled from stocks initially (post-Europe) but as stocks ramped so did spreads and VIX continues to run ahead of stocks (under 19 today) as it appears hedges are being lifted. Of course, AAPL was a big help, up over 2% pushing back towards its magical $100 ahead of this evening's results. S&P futures volume was dismally low.
First - spot the rally days in the S&P 500 (based on the lower pane only)...
On the day, stock indices were green (except the IBM-stunted Dow)
And from Bullard's QE4 comment...
and Financials and Tech are underperforming off the Bullard bottom... with Homebuilders squeezed higher
VIX notably ahead of stocks...
And while HY decoupled initially, it ramped pretty rapidly as stocks surged...
Treasury yields dipped lower on the day... rallying after Europe closed...
Decoupling from stocks...
The USD drifted weaker all day too (led by GBP and EUR strength - and AUD ahead of the China GDP tonight)
But stocks only cared about the fun-durr-mentals of EURJPY (notably decoupled from USDJPY)
USD weakness helped PMs modestly but not copper and oil...
With some notable volatility in oil prices today... but that's nothing new...
Simply put - someone really wanted the S&P back at its 200DMA to 'prove' recovery was back on.
AAPLtastic... testing up to $100 and the 50DMA
Bonus Chart: When machines read Chipotle's earnings report...
"Markets are slowly coming to grips with reality is not going to be as easy as everybody thought," Peter Schiff tells CNBC's Rick Santelli, noting the pick up in volatility across asset classes recently. What The Fed clearly does not understand, Schiff blasts, is that "you cannot end quantitative easing without plunging the US into a severe recession." Because of the Fed's extreme monetary policy and the mal-investment that flows from it, Schiff says, "The US economy is more screwed up now than it's ever been in history." Most prophetically, we suspect, Santelli agrees that "a messy exit is a given," and Schiff believes they know that and that is why QE4 is coming simply "because it hasn't worked and they can't admit it's been a dismal failure."
The two oddly-similar-tie-wearing skeptics go on to discuss the catalysts for slowdown aside from QE exit and the endgame...