Bizarre Monetary Experiment Expanded
As is well known by now, the ECB Council has decided to expand its bizarre monetary experiment further. All users of the euro are to be subjected to additional impoverishment, by means of the ECB lengthening the duration of its outright money printing scheme (while keeping its level steady at what is an already stunning €60 billion per month) and the even more absurd decision to lower its deposit facility interest rate further, to minus 30 basis points.
ECB chief Mario Draghi, who increasingly looks like something that has risen from the Crypt. US high IQ moron export Larry Summers likes his policies. Any more questions?
Photo credit: Michael Probst / AP
A Strange Event
The topic of the SU-24 Russian plane shot down by Turkey over the weekend in Syria has been discussed all over the media ad nauseam by now, but we want to add a few observations and suggestions of our own. Some have perhaps not received the attention they possibly deserve.
Image of Russian jet shortly after it was hit by a Turkish missile. Luckily someone was promptly at hand to make a qualitatively acceptable video of the incident. As is well known, cameramen just waiting to film every remotely interesting activity are standing by all over Syria, which is why we get so much material about what is really happening there.
Photo credit: DPA
The Successes of the Global War on Terror
One would think that the so-called “Global War on Terror”, which has been given fresh impetus by the Paris attacks, must be going swimmingly. What else could explain the great enthusiasm with which it is pursued? It may be recalled that it started in earnest after the WTC attack – also a declaration of war, as it was put at the time.
As is often the case when Islamist fundamentalists strike, the actual attackers immolated themselves on occasion of the attack itself, making it impossible to exact retribution. Except by proxy, that is. This was playing right into the hands of those who had planned the attacks. It seems to us that they have ultimately succeeded beyond their wildest dreams. Not to put too fine a point to it, our wise political leaders have evidently been outfoxed by a bunch of turbaned cave dwellers and goat buggerers in the Hindu Kush.
Steve Bell on the reaction to the Paris attacks.
Venezuela: Real Wages Collapse amid Continuing Crack-Up Boom
While the crack-up boom in Venezuela continues, real wages in the country have have utterly collapsed. The bolivar is still trading close to 700 to the US dollar on the black market, and the Caracas stock index keeps making new all time highs in nominal terms almost every day. Ironically, Venezuela’s currency is called the “bolivar fuerte” (VEF), i.e. “the strong bolivar” ever since it has been “reverse split” 1 for 1,000 in January 2008.
Image via designlimbo.com
Alexis Tsipras has sent a letter to Jeroen Dijsselbloem of the euro-group (you can download the letter here, pdf), in which he requests a separate bailout from the ESM, essentially proposing that the ESM take over Greece’s liabilities for a period of two years. Unsaid, but implied, is that this would result in the referendum being recalled. More likely it is just a ploy to enhance Syriza’s chances of obtaining a “no” vote in the referendum.
Image via dreamstime.com
Tsipras Takes Door Number Three
Late last week, Greece’s creditors offered a bailout extension of several months, in the course of which Greece would have received sufficient funding to make all payments due during this time period. In order to receive this package the Greek government would have had to sign a final offer made by the creditors. If one looks at the details of the negotiations, only a tiny difference remained between the Greek offer and the offer made by the creditors in the end, reportedly amounting to approximately €100 million. This makes the Mr. Tsipras’ assertion that the final offer tabled by the creditors was an “affront to Greek dignity” not especially credible. It should be noted in this context that these arithmetic games are complete nonsense anyway. In light of €360 billion of public debt, does anyone really believe it will make an iota of difference whether the retirement age in Greece is increased in 2022 or 2025, or whether the small VAT exception for the tourism industry is revoked or not? We believe there are far more important reforms Greece needs to implement.
In the meanwhile, somewhere in Athens …
Photo via allaksogolies.gr
GDP Now in Dangerous Waters
The Atlanta Fed has posted today that its GDP Now measure has reached exactly the same level as a certain Mr. John Blutarsky’s mid-term grade average. This is to say, it has declined to 0.0%.
GDP Now goes Blutarsky – via Atlanta FED
Game of Chicken Continues, EU Ratchets Up Pressure on Greece
After the ECB has made Greek debt no longer eligible for repos (note that this mainly concerns government bonds however, bank bonds that have been “guaranteed” by the government will however no longer be eligible after February 28 2015 either – these amount to a quite large € 25 billion), fears of an intensifying bank run in Greece are growing. At the end of December, Greek banks owed about € 56 billion to the euro system. This is estimated to have jumped to about € 70 billion since then.
These debts to the system have grown concurrently with a sharp decline in deposit liabilities since November last year, when it dawned on people that there might be an election. Unfortunately more up-to-date data aren’t available as of yet, but we will try to post them as soon as the Bank of Greece makes them available. However, there exist estimates regarding the extent of the decline in deposits since the end of December as well – very likely an additional € 15 billion has fled from the Greek banking system since then.
Greek Election – Decisive Victory by SYRIZA
With more than 95% of the votes in Greece’s parliamentary election counted as of the time of writing, Greece’s far-left Syriza led by Alexis Tsipras was already certain to have won a decisive victory.
US Airdrops Ensure that ISIS Remains Well Supplied …
The US air force recently engaged in an air drop of various supplies in Kobani, including high quality weapons and ammunition, which were intended to aid the remaining Kurdish fighters still holed up in the town. ISIS will probably soon send a “thank you” telegram to Mr. Obama. They have every reason to. According to Reuters:
“A Pentagon spokesman says a U.S. airdrop over the Syrian border with Turkey “did not make it into the right hands.”
Rear Admiral John Kirby told reporters on Tuesday, “that we are very confident that the vast majority of the bundles did end up in the right hands. In fact we’re only aware of one bundle that did not.”
The Pentagon is working to determine the authenticity of the amateur video posted online on Tuesday appearing to show a U.S. air drop containing military supplies, intended for Kurdish fighters in Kobani, in the hands of Islamic State fighters.
The U.S. military said it conducted six air strikes on Islamic State militants near Kobani on Sunday and Monday. It said one of the strikes destroyed a stray bundle of supplies from a U.S. air drop in order to prevent them from falling into enemy hands. The video was posted on a social media website and Reuters is unable to independently verify the location, the date and whether it was the consignment that the U.S. said it had bombed. It bears a logo which commonly features on Islamic State videos. The video shows what appears to be an airdrop of several boxes and containers with an attached parachute lying on the ground. A man wearing a black balaclava and combat fatigues opens boxes in the video, revealing packaged grenades and what appear to be rocket propelled grenades (RPGs).
So now the US air force is busy bombing its own “stray weapons” again…it seems much of the Pentagon’s work is based on the broken window fallacy. Order new weapons, drop them somewhere, and then destroy them. This will surely please US weapons manufacturers and we’re just waiting for Paul Krugman to explain what a great boon to the US economy these activities are.
The Reuters video the transcript above refers to can be viewed here.
Here is the video posted by an ISIS related account on You-tube about the incident (note that we cannot be sure for how long it will remain accessible, as You-tube often erases IS-sourced content):
Former Iraqi Pilots Allegedly Training ISIS Fighters to Fly Captured Syrian Planes
The immense Islamic radical fighting force that “came out of nowhere” already has everything from tanks, anti-aircraft weapons, heavy artillery, and so forth. Ultimately they have all these weapons were provided to them courtesy of US tax payers, who paid for the equipment that was originally given to Iraq’s army only to be later captured by ISIS with astonishing ease.
The only military plaything ISIS hasn’t had at its disposal so far is an air force. However, even that may be about to change according to recent press reports:
“Islamic State group jihadists are being trained by Saddam Hussein’s former pilots to fly three fighter jets captured from the Syrian military, a monitoring group said Friday.
The planes, which are believed to be MiG-21 and MiG-23 jets, are capable of flying although it is unclear if they are equipped with missiles, according to the Syrian Observatory for Human Rights.
The jets were seized from Syrian military airports now under IS control in the northern provinces of Aleppo and Raqa, according to the Britain-based group, which has a wide network of sources inside the war-torn country.
It said that former Iraqi army officers who once served under Saddam were supervising the training at the military airport of Jarrah, east of the city of Aleppo. Witnesses have reported seeing planes flying at a low altitude to avoid detection by radar after taking off from Jarrah.
It comes as the United States and its allies carry out a wave of air strikes on IS positions in Syria and Iraq. The jihadists also control two other airports in Syria — Albu Kamal near the Iraqi border and Tabqa in Raqa province.
Most read in the last 20 days:
- A Historic Rally in Gold Stocks – and Most Investors Missed It
Buy Low, Sell High? It is an old truism and everybody has surely heard it more than once. If you want to make money in the stock market, you're supposed to buy low and sell high. Simple, right? Successful stock market investing in two simple steps Photo via slideshare.net As Bill Bonner once related, this is how a stock market advisor in Germany explained the process to him: Thirty years ago, at an investment conference, there was a scalawag analyst...
- Gold Stocks Break Out
No Correction Yet Late last week the HUI Index broke out to new highs for the move, and so did the XAU (albeit barely, so it did not really confirm the HUI's breakout as of Friday). Given that gold itself has not yet broken out to a new high for the move, it would normally be expected to do so, as Jordan Roy-Byrne argues here. Photo via Museo del Oro / Bogota The chart below shows the situation as of Friday (HUI, HUI-gold ratio and gold): The HUI and...
- Why is the Stock Market so Strong?
Dismal Earnings, Extreme Valuations The current earnings season hasn't been very good so far. Companies continue to “beat expectations” of course, but this is just a silly game. The stock market's valuation is already between the highest and third highest in history depending on how it is measured. Photo credit: Kjetil Ree Corporate earnings are clearly weakening, and yet, the market keeps climbing. The rally is a bit of a “all of worry” type of...
- Weekly Resistance Levels in the HUI
Options Expiration Ante Portas - Just as a Resistance Level is Reached After we had penned our little missive on the breakout in gold stocks on Monday, it dawned on us that an options expiration takes place this week. Normally, gold stocks decline into the expiration date. Don't hold us to this, but the last time we remember call writers being forced to delta-hedge their way out of trouble in gold and silver stocks right at the end of an expiration week was sometime in 2006. Given...
- Gold and Negative Interest Rates
The Inflation Illusion We hear more and more talk about the possibility of imposing negative interest rates in the US. In a recent article former Fed chairman Ben Bernanke asks what tools the Fed has left to support the economy and inter alia discusses the use of negative rates. We first have to define what we mean by negative interest rates. For nominal rates it’s simple. When the interest rate charged goes negative we have negative nominal rates. To get the real rate of...
- Cultural Marxism and the Birth of Modern Thought-Crime
What the Establishment Wants, the Establishment Gets If a person has no philosophical thoughts, certain questions will never cross his mind. As a young man, there were many issues and ideas that never concerned me as they do today. There is one question, however, which has intrigued me for the longest time, and it still fascinates me as intensely as it did back then: Does spirit precede matter or is it the other way around? In other words, does human consciousness create what we...
- China – A Reversal of Urbanization?
Economic and Demographic Changes We have discussed China's debt and malinvestment problems in these pages extensively in the past (most recently we have looked at various efforts to keep the yuan propped up). In a way, China is like the proverbial “watched pot” that never boils though. Its problems are all well known, and we have little doubt that they will increasingly find expression. China's credit bubble is one of the many dangers hanging over the global economy's head, so to...
- State of Fear - Corruption in High Places
Mr. X and his Mysterious Benefactors As the Australian Broadcasting Corporation (ABC) reports, a money-laundering alarm was triggered at AmBank in Malaysia, a bank part-owned by one of Australia's “big four” banks, ANZ. What had triggered the alarm? Money had poured into the personal account of one of the bank's customers, a certain Mr. X, in truly staggering amounts. A recent photograph of Mr. X. Photo credit; Peter Foley / Bloomberg via Getty...
- Why All Central Planning Is Doomed to Fail
Positivist Delusions [ed. note: this article was originally published on March 5 2013 – Bill Bonner was on his way to his ranch in Argentina, so here is a classic from the archives] We’re still thinking about how so many smart people came to believe things that aren’t true. Krugman, Stiglitz, Friedman, Summers, Bernanke, Yellen – all seem to have a simpleton’s view of how the world works. A bunch of famous people with a simpleton view of how the...
- Russian Aggression Unmasked (Sort Of)
Provocative Fighter Jocks Back in 2014, a Russian jet made headlines when it passed several times close to the USS Donald Cook in the Black Sea. As CBS reported at the time: “A Pentagon spokesperson told CBS Radio that a Russian SU-24 fighter jet made several low altitude, close passes in the vicinity of the USS Donald Cook in international waters of the western Black Sea on April 12. While the jet did not overfly the deck, Col. Steve Warren called the action "provocative and...
- US Economy – Ongoing Distortions
Business under Pressure A recent post by Mish points to the fact that many of the business-related data that have been released in recent months continue to point to growing weakness in many parts of the business sector. We show a few charts illustrating the situation below: A long term chart of total business sales. The recent decline seems congruent with a recession, but many other indicators are not yet confirming a recession - click to enlarge. Wholesale...
- Argentina – The Times, They Are A-Changing
Our Argentine “Ranch Rebellion” Is Over… for Now… BUENOS AIRES, Argentina – Not much action on Wall Street yesterday. The Dow sold off slightly. Gold and oil were up a bit. How about here in Argentina? “Everything has changed. Everything.” Mauricio Macri shortly after his election – indicating that he actually has a plan. Photo credit: Enrique Marcarian / Reuters One of the analysts in our Buenos Aires office explained how the recent...