by ilene - October 5th, 2015 6:48 pm
Courtesy of Nomi Prins and TomDispatch
Sometimes when I look at the increasingly bizarre, never-ending campaign for the White House and the staggering fundraising that goes with it, I think to myself: if we were in Kabul, Afghanistan, we would know what this was. We would recognize warlord politics. We would understand that (Bernie Sanders aside) politicians running for the presidency now need patrons — modern-day Medicis who can fund the super PACs that are increasingly the heart and soul of a process leading to the first $10 billion election. Those billionaire funders are, of course, America’s warlords. In his book No Good Men Among the Living: America, the Taliban, and the War Through Afghan Eyes, reporter Anand Gopal offers a riveting up close and personal look at how the process works far from home. One of the Afghans he follows is a remarkable woman who, under the patronage of just such a warlord, finds herself a senator in the Afghan Parliament.
In our system, the candidates now first test their “electability” not with voters in primaries, but with a tiny coterie of the super-rich. In the case of the Koch brothers, for instance, they literally audition for support. In twenty-first-century America, these should undoubtedly be considered the real primaries and what happens starting in Iowa and New Hampshire early next year should be thought of as the secondaries. The increasingly fierce contests for money are America’s new electoral reality, the one the Supreme Court let loose on the land with its 2010 Citizens United decision that freed the voice of money to overwhelm the many voices of this country. The process of fundraising has only gained momentum since then and yet this new form of electoral politics is a system still in formation, like molten lava only now beginning to cool and settle into its future shape.
by ilene - October 5th, 2015 3:25 pm
It has been a long way up and quick ride down for SunEdison but bad news keeps piling up for the hedge fund hotel even as it dead-cat-bounces again. As the stock bounces, just as it bounced in September after Steve Cohen's Point72 exposed their stake and JPM jumped to the rescue, uncertainty remains extreme. Amid a surge in debt and increasingly negative operating cash-flow, the plunge in stock (asset) price may have triggered a cross-collateral margin call of around $315 million. Furthermore, mass layoffs are on the cards as the CEO attempts to "optimize" the business.
Some investors have dumped the stock due to low oil prices and turmoil in commodity markets — a problem for other public solar companies as well. However, short sellers have targeted SunEdison more than its competitors.
Recent acquisitions have nearly doubled SunEdison's debt load and increased negative operating cash flow. The Vivint acquisition, which wasn't an obvious fit with SunEdison's culture and traditional business of building large solar-power plants, added to investor skepticism.
The stock has become a playground for hedge funds.
But uncertainty remains extreme…
SunEdison may have triggered a collateral call on its $410 million margin loan, a report from CreditSights says, citing a decline in the financially-linked TerraForm Power Inc (known as a "yieldco," the spin-off of a related business venture), which fell 36% in September and continued to slide, down 49% year to date.
After sifting through four different SEC documents – a 10Q at SunEdison, an equity prospectus at TerraForm, a convertible bond 8K from SunEdison and a margin loan agreement at SunEdison… the report concludes it is possible SunEdison to be dragged down by TerraForm and the added burden of posting cash collateral for the margin loan that was backed by stock.
CreditSights says the margin loan is yet another example of lack of disclosure but they reiterate their our conclusion on the collateral call.
As Creditsights concludes…
there are a lot of moving parts to SunEdison and the more we find the more negative we get on the sponsor
by ilene - October 5th, 2015 3:20 pm
Courtesy of Mish.
Here is an amusing video that reader Curt shared with me moments ago. It's about tax plans of Hillary Clinton vs. Donald Trump.
Link if video does not play: Hillary Supporters Like Trump's Tax Plan.
Mike "Mish" Shedlock
by ilene - October 5th, 2015 3:14 pm
By John Mauldin
“Growth is never by mere chance; it is the result of forces working together.”
– J.C. Penney
“Strength and growth come only through continuous effort and struggle.”
– Napoleon Hill
“We’re lost, but we’re making good time.”
The Yogi Berra quote above, which was brought to my attention this week, seems an apt description of where the markets and the economy are today. Nobody is quite sure where we are or where we’re going, but we all seem to think we’re going to get there soon.
I think it’s pretty much a given that we’re in for a cyclical bear market in the coming quarters. The question is, will it be 1998 or 2001/2007? Will the recovery look V-shaped, or will it drag out? Remember, there is always a recovery. But at the same time, there is always a recession out in front of us; and that fact of life is what makes for long and difficult recoveries, not to mention very deep bear markets.
The problem is that our most reliable indicator for a recession is no longer available to us. The Federal Reserve did a study, which has been replicated. They looked at 26 indicators with regard to their reliability in predicting a recession. There was only one that was accurate all the time, and that was an inverted yield curve of a particular length and depth. Interestingly, it worked almost a year in advance. The inverted yield curve indicator worked very well the last two recessions; but now, with the Federal Reserve holding interest rates at the zero bound, it is simply impossible to get a negative yield curve.
Understand, an inverted yield curve does not cause a recession. It is simply an indicator that an economy is under stress.
So now we are in an environment where we can look only at “predictive” indicators that are not 100% reliable. Actually, most are not even close. Some indicators have predicted seven out of the last
Milton Friedman Accurately Explains the Immigration Problem in US and Europe, Government, Taxes, and Economic Freedoms in General
by ilene - October 5th, 2015 1:52 pm
Courtesy of Mish.
In previous articles I summed up the immigration problems in Europe and the US as the direct result of an “unlimited demand for free services, free shelter, and free food”.
Let’s tune into what Economist Milton Friedman has to say about Illegal Immigration.
Also consider Milton Friedman Quotes.
Friedman on Governments
- Governments never learn. Only people learn.
- If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.
- A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.
- One of the great mistakes is to judge policies and programs by their intentions rather than their results.
- Nothing is so permanent as a temporary government program.
- I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.
- Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.
Friedman on Free Trade
- Underlying most arguments against the free market is a lack of belief in freedom itself.
- Well first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade. If you want to know where the masses are worse off, worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the
by ilene - October 5th, 2015 1:20 pm
Courtesy of David Stockman at Contra Corner
by ilene - October 5th, 2015 12:15 pm
Submitted by Ron Paul via The Institute for Peace & Prosperity,
The US regime change policy for Syria has been a catastrophe. More than 200,000 killed and an entire country reduced to rubble at least partly because President Obama decided that “Assad has lost his legitimacy.” How is it that the president of a country 6,000 miles away has the authority to decide whether another leader belongs in office or not? What if Rouhani in Iran decided that Obama had lost his legitimacy for killing a number of American citizens by drone without charge or trial? Would we accept that?
At least three years of US efforts to train rebels to overthrow the Syrian government has produced, as General Lloyd Austin, Commander of US Central Command, testified last month, “four or five” trained and vetted “moderates” in Syria. The $500 million appropriated for this purpose has disappeared.
The neocon solution to this failure to overthrow Assad and “degrade and destroy” ISIS is to increase the bombing and lead a ground invasion of Syria. The confusing policy of fighting Assad and also fighting his enemies does not seem to bother the neocons. They want us to forget all about their recent failures in Libya and Iraq and to try the same failed strategy one more time.
But something dramatic happened last week. Russian president Vladimir Putin delivered a speech at the United Nations criticizing the US policy of partnering with one set of extremists – al-Qaeda and its allies – to attack both ISIS and Assad. “Do you realize now what you have done?” asked Putin.
Shortly after Putin’s UN speech, he requested and was granted authority from the Russian parliament to use force in Syria in response to the Syrian government’s request for assistance against the rebels. Russian fighters and bombers began flying sorties over Syria almost immediately. In less than a week of Russian bombing, considerable damage appears to have been done to both ISIS and to al-Qaeda affiliates – some of which are considered allies by the US and were actually trained by the CIA.
by ilene - October 5th, 2015 11:08 am
Courtesy of Pam Martens.
Last week we wrote about the invisible hand’s removal of a negative paragraph on the financial industry from the Pope’s speech before a joint session of Congress and some bizarre shenanigans with Fed Chair Janet Yellen’s highly anticipated speech in Amherst, Massachusetts. This past Saturday, Adam Posen, the President of a powerful think tank, the Peterson Institute for International Economics, delivered a speech at a conference sponsored by the Federal Reserve Bank of Boston, calling the U.S. Financial Stability Oversight Council (FSOC) “a mess.” That speech has gone missing from online access.
FSOC is the body created under the Dodd-Frank financial reform legislation of 2010 to reassure the American people that Wall Street would never again be able to take the U.S. economy, the financial system, and the housing market to the cleaners and then get a multi-trillion dollar bailout. FSOC is chaired by the U.S. Treasury Secretary, Jack Lew (an alumnus of the biggest bailout recipient, Citigroup), along with the heads of every other major U.S. financial regulator.
According to Bloomberg Business, in his conference remarks on Saturday, Posen also said that what individual financial institutions are able to do with discretion from regulators was “huge.” (That two of the mega banks in the U.S., JPMorgan Chase and Citigroup, admitted to criminal felony counts in May for rigging foreign currency markets along with other banks and that serial findings of collusion among the mega banks in multiple markets has now achieved epic dimensions, Posen’s comments would hardly seem an overstatement.)
The New York Times added more gravity to Posen’s remarks with this quote from him at the Saturday conference: “The current U.S. institutional setup is likely to fail in a crisis and will do less to prevent a crisis than it should, and we are likely to suffer from this.”
There are two places one would expect to find such a remarkably candid speech. At the official conference site where other speeches are posted or at Dr. Posen’s official page of speeches and publications at the Peterson Institute. We could not find the speech at either site, nor could we find it elsewhere on the Internet.
by ilene - October 5th, 2015 2:58 am
Courtesy of Mish.
Here's my theoretical question for the day: Why are mules stubborn, and why can't blind jackasses see?
I ask that question in regards to a few recent news articles. One is on Japan, one the US, and one on emerging markets with various overlaps in between.
Let's start with Japan.
Brink of "Technical" Recession
The Financial Times reports Japan on Brink of Technical Recession.
Japan is on the verge of a technical recession after data on industrial production raised the prospect of a second consecutive quarter of negative growth. Industrial production for August — a crucial input into gross domestic product — unexpectedly fell by 0.5 per cent on the previous month after a 0.6 per cent fall in July.
“It’s likely we’re already in technical recession,” said Masamichi Adachi, senior economist at JPMorgan in Tokyo, who forecast an annualised contraction of 1 per cent in the third quarter after 1.2 per cent in the second.
In an interview with the Financial Times this week, Mr Abe’s economic adviser, Etsuro Honda, said additional fiscal stimulus was an “urgent task”, while an increasing number of analysts expect the Bank of Japan to expand its monetary stimulus at the end of October.
Last week Janet Yellen, US Federal Reserve chair, implicitly criticised the BoJ’s policy, noting in a speech: “I am somewhat sceptical about the actual effectiveness of any monetary policy that relies primarily on the central bank’s theoretical ability to influence the public’s inflation expectations.”
The BoJ has a wide range of policy options for further easing. It could increase the rate of asset purchases from the current Y80tn ($670bn) a year; expand the range of assets it buys; or use communication tools to signal how long it will keep monetary policy loose.
IMF Warns of New Financial Crisis
The Guardian reports IMF Warns of New Financial Crisis if Interest Rates Rise.
The debts of non-financial firms in emerging market economies quadrupled, from $4tn (£2.6tn) in 2004 to well over $18tn in 2014, according to the IMF’s twice-yearly Global Financial Stability Report.
by ilene - October 4th, 2015 10:43 pm
Courtesy of Mish.
Carly Fiorina's No-Fly Zone Proposal Dead?
(Previous article by Mish questioning "our" no-fly zone here.)
The Financial Times reports Moscow Scuppers US Coalition Plans for No-Fly Zone in Syria
Russia’s bombing of anti-regime rebels in Syria has been described as a disaster for the US-led coalition’s efforts to destroy Isis, the Islamist militant group, but the Kremlin’s real challenge to Washington is in the skies above the war-torn country.
Alongside a modest Latakia-based contingent of two dozen Su-24 Fencer and Su-25 Frogfoot jets — planes designed to strike land targets — Moscow has deployed assets which render the prospect of no-fly zones enforced by the US or its allies over Syria impossible to enact.
“The ultimate reason all this is happening is because of the renewed focus on Syria and the need for some sort of political solution there — something which we thought we could achieve by enforcing no-fly zones, safe zones,” said one senior European diplomat.
But any hopes of military co-ordination with Russia to achieve this, even in the wake of its disruptive deployment, are swiftly being dashed.
Deployment of S-300s — or other similarly sophisticated systems, also known as triple-digit Sams — has long been one of the Pentagon’s biggest fears in the Middle East. The S-300 system, which has an operating range of 150km, is capable of striking down all but the most sophisticated stealth aircraft. It means most missions flown by Washington’s coalition allies — Jordan, for example, uses F-16 jets — are now highly vulnerable. Even the UK’s deployment of Tornados and Typhoons at the Royal Air Force’s base at Akrotiri, Cyprus, is threatened by the missiles.
“The Russian forces now in place make it very, very obvious that any kind of no-fly zone on the Libyan model imposed by the US and allies is now impossible, unless the coalition is actually willing to shoot down Russian aircraft,” says Justin Bronk, research analyst at the Royal United Services Institute.
“The Russians are not playing ball at deconfliction — they are just saying, ‘keep out of our way’. The coalition’s operations in Syria will be vastly more complex from a risk assessment point of view and from a mission-planning point of view.”