by ilene - January 25th, 2015 10:00 pm
Submitted by Tyler Durden.
China has some stunningly beautiful natural landscapes, but, as boredpanda.com explains, they may not count for much when, in other parts of the country, pollution runs totally unchecked. China is very close in size to the USA. Yet, as The Burning Platform notes, their population is the size of the entire Western Hemisphere, plus Japan, Germany, and France. The land can not support this mass of humanity without very dire consequences, and these shocking photos show what severe pollution people have to deal with in some parts of China…
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by ilene - January 25th, 2015 10:00 pm
Courtesy of Mish.
Contagion? Well don’t worry about that! German Chancellor Angela Merkel assures us that will not happen. However, a difference of opinion is forming in Greece, Spain, and Ireland.
Via translation from El Confidencial, SYRIZA Extends the Debate, “Ireland Stands Out: Seeks Conference to Restructure Debt, Including Spain.”
The Greek elections this Sunday still shaking European foreign ministries. …
The restructuring of the debt (about 319 billion euros in the case of Greece) scares the markets for contagion effect.
Christine Lagarde was quick to respond in the pages of the Irish Times during a visit to Dublin last Monday. “In principle, collective efforts are welcome, but at the same time a debt is a debt” she said.
Why Ireland Should Support Greek Plan
The above article was based on an Irish Times column Why Ireland Should Support Greek Plan to Write Down Eurozone Public Debt.
Contrary to many reports, Syriza is not threatening a unilateral default but wants Greece’s debt burden to be considered within a broader restructuring of sovereign debt in the euro zone. Its leader, Alexis Tsipras, has called for a “European Debt Conference”, based on the 1953 London Conference that wrote off half of post-war Germany’s debt and extended the repayment period for the rest over a number of decades. As Hans-Werner Sinn, one of Germany’s leading economists and president of the Ifo Institute for Economic Research, acknowledged recently, the 1953 conference was, along with the Marshall Plan, a key factor in enabling Germany’s post-war economic miracle.
The conference met from February 28th to August 28th, 1952, with the final agreement signed the following year and involved representatives from 20 creditor nations (including Greece, Portugal and Ireland) as well as Germany and the Bank for International Settlements. The United States, Britain and France took the lead, making clear from the outset that one of the aims of the conference was to strengthen the German economy.
The preamble to the agreement said it should help to “remove obstacles to normal economic relations between the Federal Republic of Germany and other countries and thereby to make a contribution to the development of a prosperous community of nations”.
Demanding that Germany pay all its debts was seen as incompatible
by ilene - January 25th, 2015 7:20 pm
Courtesy of Marc To Market
Reasonable people can debate some of the details, but there was little doubt that last week's big event, the ECB's asset purchases, were widely anticipated. Nevertheless, what is striking is the repeated surprises by officials over the past several months.
Perhaps it began at the end of last October with the Bank of Japan's 5-4 vote to double down on what was already an unprecedented pace of expanding its balance sheet. The in November was OPEC's decision, not to reduce production to make room for increased US production and other non-OPEC producers. Also in November, the People's Bank of China unexpected cut its 1-year deposit rate, spurring an advance of nearly 40% in the Shanghai Composite in the following six weeks.
A few hours before the Swiss National Banks stunning decision to lift its cap on the franc, the Bank of India announced a rate cut in between policy meetings, catching the market off-guard. There have been other surprises by emerging market central banks in recent weeks, and all in the direction of easing policy.
There are no fewer than eight central bank meeting in the emerging markets in the week ahead (Thailand, Israel, Russia, Hungary, South Africa, Mexico, Colombia, and Malaysia). While the risk is the greatest that Thailand cuts rates, there is scope for surprise rate cuts. We suspect it is a question of time before Russia, South Africa, Malaysia, and Colombia cut rates.
The Bank of Canada had its own surprise for investors last week when it unexpected cuts its overnight cash rate to 75 bp from 1.0%. It was the first change in rates since the mini-tightening cycle in 2010.
These stand in stark contrast to the Federal Reserve. The Fed gave investors months to prepare for tapering of its asset purchases, and even waited a bit longer than many had expected. It then proceeded to taper. It did not let an unexpected contraction in Q1 14 GDP distract it. It did not let an acceleration of the pace of job growth distract it. Nor were some bouts of market volatility sufficient. It said what it was going to do. It then did it. This is…
by ilene - January 25th, 2015 2:57 pm
Courtesy of Mish.
As late as yesterday I read numerous mainstream media reports that Syriza would win by three to five percent and would need to form an unstable coalition to rule.
In contrast, here was my January 19 prediction (and rationale): Expect a Blowout Win by Syriza in Greece.
Syriza Trounces New Democracy
The final votes are not counted, but exit polls show a blowout, with incumbent party New Democracy going down in flames.
The Wall Street Journal reports Greece’s Radical Leftist Syriza Party Poised to Win Election, Exit Polls Say.
Syriza appeared set to win between 35.5% and 39.5% of the vote, trouncing the incumbent New Democracy party, which managed to secure just 23% to 27% of the vote, according to the exit polls whose results were issued immediately after voting booths closed.
If Syriza is able to secure more than 150 seats on its own—which the exit polls show is possible—it won’t need coalition partners and will have a freer hand in implementing its platform—something that could lead to ruptures with Greece’s creditors.
The polls also showed that voters backed a handful of smaller parties—ranging from the extreme-right Golden Dawn party to the centrist To Potami party—making it unclear whether Syriza would win an absolute majority in Greece’s 300-seat legislature. According to the polls, Syriza was projected to secure between 146 to 158 seats, depending on the final outcome.
Greece Exit Polls
Note the double-digit (or near double-digit) trouncing of New Democracy leader and current prime minister Antonis Samaras.
Here’s an interesting quote from the Journal.
by ilene - January 25th, 2015 1:30 pm
Courtesy of Adam Taggart via Peak Prosperity
Saying it's been a busy week and half on the central bank front is perhaps a sizeable understatement.
First, the Swiss National Bank stunned the world (and its brethren central banks) by removing its peg to the Euro. This was quickly followed by Mario Draghi finally making good on his longtime threat of firing QE bazooka, announcing that the ECB will pursue a 60 billion Euro per month easing program for the next 16 months. And amidst all the smoke, the Canadian central bank snuck in a surprise rate cut to its interest rate.
To make sense of both the "Why?" behind these extreme moves, as well as the "What?" in terms of their implications, Axel Merk, founder and Chief Investment Officer of Merk Funds joins us this week.
In his opinion, recent events are exactly the kind the symptoms he's been expecting as the prime strategy pursued by central banks since 2008 — to force capital into speculative assets — approaches its natural and inevitable denouement. Indeed, he projects the surprises in store for us and the systemic instability we're beginning to see are just getting started:
Ultimately, central banks are just sipping from a straw in the ocean. I did not invent that term. Our senior economic advisor, Bill Poole, who is the former president of the St. Louis Federal Reserve taught us this: that central banks are effective as long as there is credibility.
What central banks have done is to try to make risky assets appear less risky, so that investors are encouraged or coerced into taking more risks. Because you get no interest or you are penalized for holding cash, you've got to go out and buy risky assets. You've got to go out and buy junk bonds. You have to go out and go out and buy equities.
The equity market, volatility until not long ago, has been very low. When volatility is low, investors are encouraged to buy something that is historically risky because it is no longer risky, right?
But as the Swiss National Bank has shown, risk can come back with a vengeance. The same thing can happen of course, in any other market. If the Federal Reserve wants to pursue an "exit" to its
by ilene - January 25th, 2015 6:31 am
Courtesy of The Automatic Earth
With The Greek election in full motion, and first results perhaps 12 hours away, It would seem useful, no matter how the Greeks vote, to lay to rest a few misconceptions, and to expose a few ‘conceptions’ that have – largely – remained buried to date.
The first misconception is that the Greeks borrowed like crazy and therefore deserve to be thrown into a pit of suffering and misery. It is simply nonsense, a mere political narrative. Besides, most of what was borrowed went to the utterly corrupt ‘oligarch system’, not to the people in the street. Something the EU was certainly aware of when it accepted Greece as a member. But corrupt regimes can be of great use.
A few days back, in Bunch Of Criminals!, I made the point that the EU, and its members, have no right to do to a fellow member country what they did to Greece – and want to continue doing -.
SYRIZA leader Alexis Tsipras said this week that he will not negotiate with the Troika, but directly with EU officials. And there is a very solid reason for that. In today’s Observer, Helena Smith interviews Greek sociologist Constantine Tsoukalas, who understands what has been happening to his country, and – rightfully – frames it in terms of Naomi Klein’s Shock Doctrine.
What has happened to Greece is what Klein describes was done to South America and – later – Eastern Europe. Disaster capitalism. Bringing entire countries to their knees by enforcing predatory economic policies, and then using the ensuing chaos and smouldering ruins to take full control over their political, economic and social systems. Helena Smith:
For Professor Constantine Tsoukalas, Greece’s pre-eminent sociologist, there is no question that, come Monday, Europe will have reached a watershed. I first met Tsoukalas in January 2009, in his lofty, book-lined apartment in Kolonaki. For several weeks Athens had been shaken by riots triggered by the police shooting of a teenage boy. The violence was tumultuous and prolonged.
by ilene - January 24th, 2015 11:42 pm
Courtesy of Mish.
Zach Sims, a college dropout founded Codecademy, a website which enables users to learn six popular programming languages, via a simple interface, for free. Codecademy is three-years-old now and Sims has 26 million students.
Sims was invited to the World Economic Forum in Davos to talk about online education. He was Codecademy’s first student, creating Codecademy to teach himself.
Please consider The Man with 26 Million Students.
One unlikely WEF attendee – a 24-year-old from New York who dropped out of Columbia University before completing his degree – is grabbing the attention of crusty executives gathered in this mountain resort.
Introduced by global leaders as the “man who has 26 million students”, Zach Sims runs a three-year-old website called Codecademy, which enables users to learn six popular programming languages, via a simple interface, for free.
Zach is hardly the Davos type – he apologises when using buzzwords such as “intersection” and uses sarcastic air quotes when talking about the WEF’s “new digital context” slogan – but he is a vivid example of a “skills gap” victim, albeit a first-world one.
“When I was looking for internships in my junior year, at companies like Goldman Sachs and McKinsey, I realised that nobody I was going to college with had any skills that would be relevant in that context,” he says
“We figured if students at Columbia – a top five school in the country, can’t find jobs when they graduate, there was probably a problem.”
So Zach started to teach himself to code. “We built the first version of Codecademy for me,” he explains, and with the help of a friend, Ryan Bubinski, he expanded the site.
Mr Bubinski became co-founder and together they launched Codecademy, in August 2011.
In the first weekend more than 200,000 people used the product – “it gave the ability to send emails to all those people who said the market size was limited,” Zach quips, unable to suppress a smile.
The site now reaches almost 26 million students in more than 100 countries, and is helping people from all economic backgrounds to “up-skill”, including residents of African refugee camps and single mothers in the US….
by ilene - January 24th, 2015 6:46 pm
Courtesy of Mish.
The rebel attack on Mariupol, Ukraine is underway as noted earlier today in Attack on Mariupol Begins; 7,000-8,000 Ukrainian Forces Nearly Encircled in Northern Cauldron; US Sends Army Trainers.
Disinformation regarding the attack is running rampant, even bordering on the outright ridiculous.
For example, a reader sent me a link to Ukraine@War, a UK website that made these claims regarding Mariupol:
- “This is done by RUSSIAN rocket launchers, with RUSSIAN rockets, by soldiers speaking RUSSIAN, running RUSSIAN flags on their vehicles and with RUSSIAN emblems on their sleeves…”
- Russian Major-General Vyaznikov is relocating his HQ to Soledar, Ukraine.
The reader who sent the link asserted “You wanted photos, satellite images, twitter feed posts, etc….so here you go”.
The entire website was nothing but allegations. The site has maps with claims like “this is where Russians launched their attack”.
I prefer actual evidence of things. For example, please consider this image of a Ukrainian reporter in Mariupol asking a soldier a question.
Who is this man? Where is he from?
The curious thing about that soldier, hiding is face, is that he responded to a Ukrainian reporter’s question, in English with: “Out of my face! Out of my face please!” right at the 2:34 mark in the following video….
by ilene - January 24th, 2015 5:24 pm
When it comes to the national security state, our capital has become a thought-free zone. The airlessness of the place, the unwillingness of leading players in the corridors of power to explore new ways of approaching crucial problems is right there in plain sight, yet remarkably unnoticed. Consider this the Tao of Washington.
Last week, based on a heavily redacted 231-page document released by the government in response to a Freedom of Information Act lawsuit, Charlie Savage, a superb reporter for the New York Times, revealed that the FBI has become a “significant player” in the world of warrantless surveillance, previously the bailiwick of the National Security Agency. The headline on his piece was: “FBI is broadening surveillance role, report shows.”
Here’s my question: In the last 13 years, can you remember a single headline related to the national security state that went “FBI [or fill in your agency of choice] is narrowing surveillance role [or fill in your role of choice], report shows”? Of course not, because when any crisis, problem, snafu or set of uncomfortable feelings, fears, or acts arises, including those by tiny groups of disturbed people or what are now called “lone wolf” terrorists, there is only one imaginable response: more money, more infrastructure, more private contractors, more surveillance, more weaponry, and more war. On a range of subjects, our post-9/11 experience should have taught us that this -- whatever it is we’re doing — is no solution to anything, but no such luck.
More tax dollars consumed, more intrusions in our lives, the further militarization of the country, the dispatching of some part of the U.S. military to yet another country, the enshrining of war or war-like actions as the option of choice — this, by now, is a way of life. These days, the only headlines out of Washington that should surprise us would have “narrowing” or “less,” not “broadening” or “more,” in them.
Thinking outside the box may seldom have been a prominent characteristic of Washington, but when it comes to innovative responses to problems, our political system seems particularly airless right now. Isn’t it strange, for instance, that being secretary of state these days…
by ilene - January 24th, 2015 4:53 pm
By John Mauldin
In today’s Outside the Box, good friend Ben Hunt informs us that we have entered the cult phase of the Golden Age of the Central Banker:
We pray for extraordinary monetary policy accommodation as a sign of our Central Bankers’ love, not because we think the policy will do much of anything to solve our real-world economic problems, but because their favor gives us confidence to stay in the market. I mean, does anyone really think that the problem with the Italian economy is that interest rates aren’t low enough? Gosh, if only ECB intervention could get the Italian 10-yr bond down to 1.75% from the current 1.85%, why then we’d be off to the races! Really? But God forbid that Mario Draghi doesn’t (finally) put his money where his mouth is and announce a trillion euro sovereign debt purchase plan. That would be a disaster, says Mr. Market. Why? Not because the absence of a debt purchase plan would be terrible for the real economy. That’s not a big deal one way or another. It would be a disaster because it would mean that the Central Bank gods are no longer responding to our prayers.
But, he points out, the cult phase of any human society is a stable phase in the sense that, while change may happen, it will not happen from within:
There is such an unwavering faith in Central Bank control over market outcomes, such a universal assumption of god-like omnipotence within this realm, that any internal market shock is going to be willed away.
However, there is a minor catch: external market risk factors are all screaming red.
I’ve been doing this for a long time, and I can’t remember a time when there was such a gulf between the environmental or exogenous risks to the market and the internal or behavioral dynamics of the market. The market today is Wile E. Coyote wearing his latest purchase from the Acme Company – a miraculous bat-wing costume that prevents the usual plunge into the canyon below by sheer dint of will.