Archive for 2012

Guest Post: Revolution Is Evolution

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by The Needle blog

Revolution is Evolution

This article should not be read as support for violent revolutionary political change but hopefully it will demonstrate that, far from revolution being unnatural and contrary to evolution, it is actually a process of evolution.

All organic structures can be modelled using evolutionary theory and governance, politics and economics, which involve the cooperation of millions of human beings are no exception.

Because everyone is more familiar with evolutionary theory being used to model changes in the natural world, we’ll start by looking at examples in the natural world where revolution occurs as part of the process of evolution, demonstrating that revolution is not an artificial human construct but actually quite normal under particular circumstances.

Revolution occurs in the natural world when a lifeform becomes extinct because the environment it depends on for survival changes at a faster rate than it can evolve.

This can happen in two ways, either the environment is subject to sudden change, as in the case of the dinosaurs or, far more commonly, the environment changes gradually and the lifeform finds itself increasingly ill-adapted before becoming extinct. Because each lifeform has a relationship with other lifeforms there is a knock on effect.

Evidence of extinction in the natural world is the history of the end of one regime precipitating a revolution. Under circumstances where a better adapted lifeform survives occupying a similar ecological niche to the lifeform that becomes extinct, the consequences or upheaval due to this revolution on other lifeforms within the environment can be minor. Where there is no lifeform already naturally adapted to assume dominance within that ecological niche the consequences can be complex and considerable until evolution restores a balance once again.

Having outlined the circumstances under which revolution occurs in the natural world let’s look at two historical political revolutions. The first we’ll look at is the American Revolution. In this example the dominant ’lifeform’ which became extinct would be Great Britain and the environment would be what is now the eastern seaboard of the USA. Great Britain was surpringly ill-adapted to this environment, it’s dominance was due primarily to the fact that other ‘lifeforms’ were even less well adapted. Great Britain ruled and projected it’s power over a great distance [it is interesting to note that it could take up to 6 weeks to send instructions across the Atlantic to put that in…
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Dead and Deader

Courtesy of ZeroHedge. View original post here.

Submitted by ilene.

Dead and Deader

Phil Davis of Phil’s Stock World is sounding a little bearish.

Excerpt from Stock World Weekly

Redrum, redrum, REDRUM!

OK, if you haven’t seen “The Shining” that may not make sense but the short story is Shelly Duval should have listened to that crazy kid and gotten the Hell out of that house. That’s how I felt about the markets after reading Wednesday’s Beige Book.

Hsac, hsac, HSAC!!!—would be more accurate (and if you can’t figure that out, perhaps you should stick to Cramer or some simpler form of financial analysis). In Wednesday morning’s post, I point- ed out that Hugh Hendry, one of the only analysts I actually respect, had said “Bad things are going to happen and I still think the closest analogy is the 1930s” and we discussed the massive drought in the US and how conditions are, indeed moving towards what we did have in the 1930s—from the record income disparity to the rising unemployment to the destabilization in Europe… No wonder I titled Thursday’s post “Déjà Vu All Over Again.”

It’s a shame that we waited all this time with our cash only to finally see opportunities on the short side but we need to play the cards we are dealt. Yes, there are many companies that do seem cheap—just as there were many companies that seemed cheap in July of 2008, when we slipped from 14,000 in October 2007 to 11,000 on the Dow and seemed to find a bottom. In October of 2008, things seemed even cheaper as we held that 8,000 line—who knew we had another 20% to fall after that and wouldn’t see 8,000 again until the following April?

Our only bullish premise since we bought at the June bottom was that we would get some form of stimulus to move the markets higher. We were not deluded into thinking things were actually fixed, nor do we think that the stimulus (if it ever comes) will actually fix anything but you can inject a few hundred cc’s of adrenaline into a guy who’s pretty much dead and still get a reaction—that’s all we’re expecting—just a little reaction to some additional stimulus.

But what if the stimulus doesn’t come? Then all you have is that economy that’s pretty much dead and getting deader


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The China Syndrome

Courtesy of Vitaliy Katsenelson.

MOST PEOPLE are convinced by now that there is a fixed-asset bubble in China that is on the verge of bursting. The question is, what is next? The answer will depend on how much debt is in the system. The more debt infesting the system, the further and steeper asset price declines will be and the longer and more painful recovery will be. The official Chinese debt-to-GDP ratio is an unalarming 20 percent or so. But the true number is likely to be a lot greater, as it is hiding in — and off — the balance sheets of state-owned enterprises (SOEs) and municipal governments, explicitly or implicitly guaranteed by the Chinese government.

I tend to ignore the guarantees, or the lack thereof, for one simple reason: Most of the debt is underwritten by Chinese banks, which are majority-owned by the government and for all practical purposes guaranteed by it.

The Financial Times had an interesting article in June titled “China Warns on Lending to Steel Plants.” When you read the headline, you think, “Well, there is overcapacity in the Chinese steel industry, and the government is trying to curb it by cutting off lending.” Though this is correct — there is significant overcapacity in the steel industry, especially as China runs out of money building ghost towns and empty skyscrapers — the article is not about that. It talks instead about how steel SOEs used loans from banks to speculate on property and stocks.

“The China Banking Regulatory Commission said in its directive that steel trading companies had borrowed from banks for steel-related activities — sometimes then using the same collateral to get multiple loans from different financial institutions. Then, with little demand for steel, they had used the money for risky investments, such as stocks and property.”

Remember all the talk about how China had no derivatives, no collateralized debt obligations–squared? Well, Chinese SOEs seem to have invented their own version of a CDO-squared: They used the same collateral to get multiple loans, and Wall Street didn’t even have a hand in it. So when you hear an argument that loan-to-value levels are much lower in China than in the U.S., keep in mind that when you give out a loan secured by an asset that is pledged on another loan, loan-to-value has no meaning.

Steel companies are not the only SOEs that…
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Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David’s free newsletter and receive the free report from All About Trends – “How To Outperform 90% Of Wall Street With Just $500 A Week.” Tell David PSW sent you. – Ilene





Lieborgate: Here Come The Arrests

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

For over four years, virtually everyone in the finance industry knew that Libor was manipulated. The stench of manipulation rose to the very top and thanks to a document release of formerly confidential information, we now know for a fact that even the Fed was in on it – recall that as part of production, the Fed provided a transcript of an April 2008 phone call between a Barclays trader in New York and Fed official Fabiola Ravazzolo, in which the unidentified trader said: “So, we know that we’re not posting um, an honest LIBOR.” And yet without any tangible, black on white evidence, there was no catalyst for pursuing legal action. That all changed when in a desperate attempt to protect its ass, Barclays decided to rat out everyone by settling with regulators, and “turn state” producing e-mail based evidence, most of it quite visual (after all what is more tangible to the common man that evil bankers sipping on Bollinger), which essentially threw years of quiet cartel cooperation under the bus. As a result, regulators, enforcers, and legal authorities, many of whom were in on this manipulation from the beginning, no longer had an excuse to not pursue civil and criminal charges against perpetrators, who until recently were footing the tabs at various gentlemen’s venues and ultra expensive restaurants. And while the imminent waterfall of civil prosecution will force bank litigation reserves to go through the roof, here comes, with a very long delay, the criminal charges. As Reuters reports, here come the arrests.

But before we get into it, we wanted to share something mildly curious involving that British Bankers Association: the entity that until recently at least, was implicitly in charge of the Libor fixing, submission, and distribution process (also the entity that will quite soon be non-existent). It involves the BBA’s self-professed Governance process and obligations. The extract below shows what it is currently.

All aspects of the operation and management of bbalibor as a benchmark are the responsibility of the independent Foreign Exchange and Money Markets Committee (‘FX&MM Committee’). This includes design of the benchmark and the governance and scrutiny of all bbalibor data and all panel bank contributions. BBA LIBOR Ltd undertakes the day to day


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IMF Seeks to Halt Aid to Greece; September Bankruptcy Awaits; Dominoes Will Fall

Courtesy of Mish.

According to Der Spiegel, the IMF Wants to Stop Aid to Greece as soon as the ESM is up and running in September. At that time Greece would become bankrupt.

This is a Mish-modified translation from German:

The patience of the International Monetary Fund (IMF) with Greece comes to an end: According to to information obtained by SPIEGEL, senior IMF officials told EU leaders in Brussels that the IMF was no longer willing to provide additional funds for Greece.

The Troika estimates that Greece needs between ten and 50 billion € to meet targets, but many governments in the euro zone are no longer willing to shoulder new burdens. In addition, countries like the Netherlands and Finland, have linked their support because the IMF was involved.

The risk of withdrawal of Greece from the monetary union is now held in the countries of the Euro-zone control. To limit the risk of contagion to other countries, governments want to wait for the start of the new bailout ESM.

The judgment of the German Constitutional Court regarding the ESM on September 12th will come into play.

Dominoes Will Fall

I picked this story up from Roel at Automatic Earth. Here are some interesting point of view from Automatic Earth that I generally agree with.

It’ll be a lot of fun seeing the IMF, and European leaders, try to deny the article and its implications. From what I understand, they want to wait until the ESM is effective, and then dump Greece. The article may trump any such intentions. Some things only work in secret, and once Pandora’s box is open, they no longer do.

I still think it would be curious that the ESM, supposedly good for €700 billion or so (if not more), would be used to “save” Spain and perhaps Italy, but not Greece. For countries like Portugal and Ireland, dumping Greece would mean they need to get very nervous about being the next one thrown under the wheels and off the back end of the wagon.

The message might become that any and all reform and austerity measures demanded must be adhered to very strictly or else. Politicians in these other “borderline” countries might go along with it all, but


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Summer Heat Scorches Europe and U.S.

Courtesy of John Nyaradi.

Europe flares as summer heat continues

Summer heat covers the nation as Europe’s debt crisis flares again.

On My Wall Street Radar

chart courtesy of StockCharts.com

In the chart of the S&P 500 above (NYSEARCA:SPY) we can see how the sideways channel between 1380 and 1330 continues to form.  RSI is starting to decline, along with MACD, as the summer doldrums continue.

View From The Summit

Last week’s economic reports brought spots of sunshine to the housing market with the NAHB Home Builder Index rising, along with a strong June Housing Starts report.

Equity markets were rallying most of the week in response to relatively positive earnings reports and hopes for more easing by Dr. Bernanke and the Federal Reserve.

But on Friday, Europe raised its ugly head again as Spanish bond yields climbed back into the red zone above 7% and Valencia, one of its regions, reported that it would need help from the central government which has difficulties of its own.  As many as six Spanish regions could be lining up for financial help from the central government.  Austerity and recession is likely to continue.

U.S. stock indexes fell in response to the renewed threat with the Dow Jones Industrial Average (NYSEARCA:DIA) dropping 120 points, 0.93%, the Nasdaq 100 (NYSEARCA:QQQ) sliding 1.4% and the Russell 2000 (NYSEARCA:IWM) slipping 1.3%.

At home, U.S. Retail Sales were down in June for the third month in a row and the Philadelphia Fed report declined more than expected while existing home sales continued their decline.

For the week, the S&P 500 (NYSEARCA:SPY) gained 0.4% for the week, the Dow Jones Industrial Average (NYSEARCA:DIA) was also up 0.4% for the week and the Nasdaq (NYSEARCA:QQQ) added 0.6%.

Agriculture ETFs remain hot as

The Midwest continues its record heat wave which is sending shock waves through the agricultural commodity world.

Supplies are threatened and crop failure is being discussed as summer wears on.  June was the fourth hottest month ever, according to the National Oceanic and Atmospheric Association.

Most analysts forecast higher prices ahead as the drought is forecast to continue into late July.

Soybeans have reached record highs and corn is also near a record high on commodity futures exchanges.

Agricultural ETF prices have seen sharp rises with PowerShares…
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Super Rich Stash At Least $21 Trillion In Secret Tax Havens | Finance

Super Rich Stash At Least $21 Trillion In Secret Tax Havens

Image: Secret Safe Books

The Tax Justice Network just issued a report that shines a revealing light on secret funds of the earth's wealthiest. Indeed, if these funds were added to the official wealth of the 139 countries investigated, these would turn from debtors (to the tune of $4.1 trillion) to creditors (worth $10.1-13.1 trillion).

Revealed: global super rich has at least $21 trillion hidden in secret tax havens

At least $21 trillion of unreported private financial wealth was owned by wealthy individuals via tax havens at the end of 2010. This sum is equivalent to the size of the United States and Japanese economies combined.

There may be as much as $32 trillion of hidden financial assets held offshore by high net worth individuals (HNWIs), according to our report The Price of Offshore Revisited, which is thought to be the most detailed and rigorous study ever made of financial assets held in offshore financial centres and secrecy structures.

We consider these numbers to be conservative. This is only financial wealth and excludes a welter of real estate, yachts and other non-financial assets owned via offshore structures.

The research for the Tax Justice Network (TJN) by former McKinsey & Co Chief Economist James Henry comes amid growing concerns about an enormous and growing gulf between rich and poor in countries around the globe. Accompanying this


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The Cost Of Government Regulation: $1.75 Trillion

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

From Bill Buckler, author of The Privateer

The Cost Of “Intervention”

The Competitive Enterprise Institute (CEI) is a small “think tank” in Washington DC which puts out an annual report called: “Ten Thousand Commandments”. The report deals with the regulatory agencies of the US federal government and the cost of the regulations they continually introduce – and enforce. This report would be typical of the regulatory function of pretty well every government in the world.

In all interventionist economies, regulations are not set by the “lawmakers”. The “lawmakers” merely pass the laws, their enforcement is left to the various bureaucratic departments of government. And in order to “enforce” the laws, the bureaucrats see it as their function to impose regulations – countless thousands of them. The cost of complying with these regulations is met by those being regulated. It does NOT show up in the annual budgets (funded or unfunded) of the government.

In their Ten Thousand Commandments 2012 report which was released in June, the CEI estimates the cost of US government regulation at $US 1.75 TRILLION. That is just under half (48 percent) of the budget of the federal government. It is almost ten times the total of all corporate taxes collected and almost double the total collected from individual income taxes. It is also one-third higher than the total of all pre-tax corporate profits. It is the hidden cost of doing business in an interventionist economy. The fact that the cost of complying with these regulations is substantially higher than the total of corporate profits is a stark illustration of the end result of economic intervention. That end result is capital consumption.

In the US, the federal government lists its regulations in what is called the Code of Federal Regulations. These rules of the economic “game” cover 169,000 pages and more than ten new ones are added every day, seven days a week and 365 days a year. In 2011, the US Congress passed a total of 81 new “laws” while government agencies issued 3,807 new regulations. As the CEI points out, if there ever was an example of government without the consent of ANYONE – this is it.





Floodgates Open As Four More Spanish Regions Seek Bailout; German Nürburgring Faces Bankruptcy

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Even as Europe has become an utterly dysfunctional experiment in everything relating to modern economics and monetary theory, it has one redeeming feature: it has proven that the Defection regime under Game Theory is 100% correct. It says that once the defections from an unstable Nash equilibrium begin, there is no stopping until the entire system collapses under its own weight. This is precisely what has happened in Spain, where first Catalunya, then Valencia on Friday, and now virtually everyone else is set to demand a bailout. From Bloomberg: The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais reported. Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday, the newspaper said, without citing anyone.”

“Spain created the 18 billion-euro ($23 billion) bailout mechanism last week to help cash-strapped regions even as its own access to financial markets narrows.” What Spain’s perfectly insolvent and highly corrupt regions also know is that the bailout money, like in the case of the ESM, will be sufficient for one, perhaps two, of the applicants. The rest will be out of luck.

Where the bailout money will come from? Ultimately from Germany of course. There is however one minor glitch. Some 80 millions Germans may soon be rather angry to learn that while they are working extra hours to fund the rescue of a few insolvent windmills, their own most legendary racetrack, the Nürburgring, is facing bankruptcy as soon as next week. From Spiegel:

With millions of euros in debts and an inability to pay back its loans, the operator of Germany’s fabled Nürburgring racetrack, home to many of the country’s Formula One races, could declare bankruptcy next week. It may be the end of the legendary racecourse, which first opened in 1927.

 

Formula One racing is in the blood of many Germans. The country is home to such car racing legends as Michael and Ralf Shumacher and Sebastian Vettel. And every two years, tens of thousands of Germans descend on the


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Zero Hedge

Explosion Hits Russia's Largest Virus Lab Which Houses Plague, Smallpox, Ebola And Other Deadly Viruses

Courtesy of ZeroHedge View original post here.

A sudden explosion at a Siberian virus research center on Monday reportedly left the facility engulfed in flames, according to several Russian news outlets. 

Firefighters and other emergency personnel were dispatched to the "Vector Institute" located several miles from Novosibirsk - an emergency which was upgraded "from an ordinary emergency to a major incident," a...



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Phil's Favorites

The future of work will still include plenty of jobs

 

The future of work will still include plenty of jobs

Even though the future is unknown, Canada’s employment rate has risen steadily from 53 per cent in 1946 to more than 61 per cent today. (Shutterstock)

Courtesy of Wayne Simpson, University of Manitoba

There is now widespread anxiety over the future of work, often accompanied by calls for a basic income to protect those displaced by automation and other technological changes.

As a labour economis...



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Lee's Free Thinking

Is The Drone Strike a Black Swan?

Courtesy of Lee Adler

Pundits are calling yesterday’s drone strke a “black swan.” Can a drone strike on a Saudi oil facility, be a “black swan.”

According to Investopedia:

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

I seriously doubt that no one expected or could have predicted a drone strike on a Saudi oil facility.

Call Me A B...

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Insider Scoop

New Relic Cuts 2020 Sales Guidance, Announces Changes In Management

Courtesy of Benzinga

New Relic (NYSE: NEWR) has reaffirmed its second-quarter guidance and cut its sales guidance for fiscal year 2020 from $600 million-$607 million to $586 million-$593 million.

The company’s chief technology officer, Jim Gochee, and chief revenue officer, Erica Schultz, have resigned. New Relic also named board member Michael Christenson as its chief operating officer. Christenson joins from his ...



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The Technical Traders

Metals are following downside sell off prediction before the next rally

Courtesy of Technical Traders

It is absolutely amazing how the precious metals markets have followed our October 2018 predictions almost like clockwork.  Our call for an April 21~24 momentum base below $1300 followed by an extensive rally to levels above $1550 has been playing out almost like we scripted these future price moves.

Now that the $1550 level has been reached, we are expecting a rotation to levels that may reach just below the $1490~1500 level before attempting to set up another momentum base/bottom formation.  And just like clockwork, Gold has followed our predictions and price is falling as we expected. Just look at our October 2018 chart where we forecasted the price of gold...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Kimble Charting Solutions

Bond Yields Due For Rally After Declining More Than 1987 Stock Crash

Courtesy of Chris Kimble

U.S. Treasury Bond Yields – 2, 5, 10, 30 Year Durations

The past year has seen treasury bond yields decline sharply, yet in an orderly fashion.

This has spurred recession concerns for much of 2019. Needless to say, it’s a confusing time for investors.

In today’s chart of the day, we look at a longer-term view of the 2, 5, 10, and 30-year treasury bond yields.

Short to long term bond yields are all testing 7 to 10-year support levels as momentum is at the lowest levels in a decade.

A yield rally is likely due across the board after a recent decline that was bigger than the stock crash in 1987!

If yields fail to ral...



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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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