Economy

How Japanese Hyperinflation Starts (In One Chart)

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– How Japanese Hyperinflation Starts (In 1 Chart) (ZeroHedge, Oct 21, 2014):

The Japanese Yen’s real effective exchange rate (REER) has collapsed to the weakest since 1982, according to Mitsubishi UFJ Morgan Stanley Securities. Simply put, REER is a trade-weighted measure of Yen strength (or weakness) against, in this case, 59 trading partners; and as the nation posts an unprecedented 27th straight month of trade deficits [43rd straight month of Seasonally-adjusted trade deficits], Bloomberg reports MUFJ indicates “a structural shift” has taken place.

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As a reminder, the Real Effective Exchange Rate (REER) is:

Read moreHow Japanese Hyperinflation Starts (In One Chart)

Fed Inspector General Finds NY Fed Knew Of JPMorgan ‘Whale’ Risks In 2010, ‘Missed Opportunity’

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From the article:

“So – in conclusion – The Fed admits it knew about the risks of JPMorgan’s London Whale in 2010 (2 years before the blow-up) and did nothing about it, and now, two years later, The Fed tells banks it will get serious…”

SUICIDE-GUN

– Fed Inspector General Finds NY Fed Knew Of JPMorgan ‘Whale’ Risks In 2010, “Missed Opportunity” (ZeroHedge, Oct 21, 2014):

Just two years after “The London Whale” took a storm-in-a-teacup to a balance-sheet-busting reality for Jamie Dimon and exposed a face-slapping level of regulatory ignorance of how the TBTF banks ‘trade’ and ‘lever’ their balance sheets, the Federal Reserve’s Inspector General has issued their findings…

Bear in mind, as @ctorresreporter notes, the Fed’s OIG report is a 4-page summary and The Senate released a 300-page report last year… Choose Your Watchdog!!

Read moreFed Inspector General Finds NY Fed Knew Of JPMorgan ‘Whale’ Risks In 2010, ‘Missed Opportunity’

Russia Deploys Troops, Robots Along Entire “2nd Middle East” Arctic Belt

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– Russia Deploys Troops, Robots Along Entire “2nd Middle East” Arctic Belt (ZeroHedge, Oct 21, 2014):

On the heels of Sweden’s military deployment (following the discovery of a damaged Russian sub), it appears Russia is taking no chances with its access to Arctic resources.As Reuters reports, the Russian defense minister announced today that Russian military units will be deployed along the entire Arctic border from Murmansk to Chukotka in 2014. Interfax adds that combat robots are also being deployed to protect Russian oil and gas infrastructure in the harsh environment of the Arctic. This should be no surprise as The Guardian notes, the Arctic’s hydrocarbon resources nevertheless exert a powerful pull. It has been compared to “a second Middle East”, with oil and gas reserves thought to represent 17% and 30%, respectively, of the global total.

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The Magic Number Is Revealed: It Costs Central Banks $200 Billion Per Quarter To Avoid A Market Crash

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– The Magic Number Is Revealed: It Costs Central Banks $200 Billion Per Quarter To Avoid A Market Crash (ZeroHedge, Oct 21, 2014):

“For over a year now, central banks have quietly being reducing their support. As Figure 7 shows, much of this is down to the Fed, but the contraction in the ECB’s balance sheet has also been significant. Seen from this perspective, a negative reaction in markets was long overdue: very roughly, the charts suggest that zero stimulus would be consistent with 50bp widening in investment grade, or a little over a ten percent quarterly drop in equities. Put differently, it takes around $200bn per quarter just to keep markets from selling off.”

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Europe Demands Banks Hand Over Their Lunch Money Following Swiss Franc Libor Rigging

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– Europe Demands Banks Hand Over Their Lunch Money Following Swiss Franc Libor Rigging (ZeroHedge, Oct 21, 2014):

…And don’t do it again!

Having confirmed that RBS, UBS, JPMorgan,,and Credit Suisse operated a cartell to manipulate bid-ask spreads of Swiss Franc libor, the European Commission has unleashed unmerciless vengeance on these law-breaking institutions:

JPMorgan fined EUR 72.2 Million, UBS fined EUR 12.7 Million, Credit Suisse fined EUR 9.17 Million, & RBS Nothing (for whistle-blowing).

Read moreEurope Demands Banks Hand Over Their Lunch Money Following Swiss Franc Libor Rigging

113 Federal Reserve Staff Members Make $250,000 Annually

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– 113 Federal Reserve Staff Members Make $250,000 Annually (Liberty Blitzkrieg, Oct 21, 2014):

Just in case you need another reason to dislike the thieving Federal Reserve. From Reuters:

(Reuters) – The top 113 earners among staff at the Federal Reserve’s Washington headquarters make an average of $246,506 per year, excluding bonuses and other benefits – more than Fed Chair Janet Yellen and nearly double the normal top government rate.

Don’t worry Janet, once you leave, you can earn $250k per speech like your hero Banana Ben Bernanke.

Read more113 Federal Reserve Staff Members Make $250,000 Annually

In Uncharted Waters

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– In Uncharted Waters (Washington’s Blog, Oct 21, 2014):

What I see as extremes that must necessarily end badly, others see as mere extensions of recently successful policies and trends.

A long-time reader recently chastised me for using too many maybe’s in my forecasts. The criticism is valid, as “on the other hand” slips all too easily from qualifying a position to rinsing it of meaning.

That said, given that we’re in uncharted waters, maybe’s become prudent and certainty becomes extremely dangerous. I have long held that the financial policy extremes that are now considered normal are unprecedented in the modern era: extremes in debt, leverage, risk, complexity and willful obfuscation of these extremes.

Read moreIn Uncharted Waters

19 Very Surprising Facts About The Messed Up State Of The U.S. Economy

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– 19 Very Surprising Facts About The Messed Up State Of The U.S. Economy (Economic Collapse, Oct 20, 2014):

Barack Obama and the Federal Reserve are lying to you.  The “economic recovery” that we all keep hearing about is mostly just a mirage.  The percentage of Americans that are employed has barely budged since the depths of the last recession, the labor force participation rate is at a 36 year low, the overall rate of homeownership is the lowest that it has been in nearly 20 years and approximately 49 percent of all Americans are financially dependent on the government at this point.  In a recent article, I shared 12 charts that clearly demonstrate the permanent damage that has been done to our economy over the last decade.  The response to that article was very strong.  Many people were quite upset to learn that they were not being told the truth by our politicians and by the mainstream media.  Sadly, the vast majority of Americans still have absolutely no idea what is being done to our economy.

For those out there that still believe that we are doing “just fine”, here are 19 more facts about the messed up state of the U.S. economy…

Read more19 Very Surprising Facts About The Messed Up State Of The U.S. Economy

McDonalds Sales Plunge In Worst Month Since 2003 Following Dollar Meal “Sticker Shock”

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– McDonalds Sales Plunge In Worst Month Since 2003 Following Dollar Meal “Sticker Shock” (ZeroHedge, Oct 21, 2014):

Moments ago, McDonalds not only released earnings and revenues, both of which missed – something which was largely expected since the backward looking data had been telegraphed by MCD’s recent global selling collapse – blanketed by atrocious commentary, but it disclosed its September global retail sales which were for lack of a better word, a disaster, after reporting global sales which dropped 3.8%, below the 3.2% expected, and the worst global month since at least 2003. The pain was everywhere, with Europe plunging 4.2% (est -0.9%), Asia down 7.5%, and the US down a whopping 4.1%, far below the 2.8% expected, and also the worst month in over a decade.

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Germany’s Merkel Agrees with ‘Angry’ Slovak Leader that Ukraine Bums EU to Pay for Russian Gas

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– Germany’s Merkel Agrees with ‘Angry’ Slovak Leader that Ukraine Bums EU to Pay for Russian Gas (Washington’s Blog, Oct 21, 2014):

But Merkel says EU taxpayers will have to subsidize Ukraine.

On October 21st, the German Economic News  headlined (as translated), “Merkel: EU Taxpayers Should Finance Debt of Ukraine,” and reported that, “Angela Merkel visited [Slovakia’s Prime Minister] Robert Fico on Monday [in the Slovak capital of Bratislava]. Both leaders demand that Kiev should take more responsibility,” and not push the EU to pay Ukraine’s past-due gas bills from Russia’s Gazprom.

Read moreGermany’s Merkel Agrees with ‘Angry’ Slovak Leader that Ukraine Bums EU to Pay for Russian Gas

‘Anti-Petrodollar’ CEO Of French Energy Giant Total Dies In Freak Plane Crash In Moscow

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– “Anti-Petrodollar” CEO Of French Energy Giant Total Dies In Freak Plane Crash In Moscow (ZeroHedge, Oct 20, 2014):

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.

*  *  *

As RT reports,

Read more‘Anti-Petrodollar’ CEO Of French Energy Giant Total Dies In Freak Plane Crash In Moscow

Obama’s Latest Speech About The Economic ‘Recovery’ Results In Mass Audience Exodus

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– Obama’s Latest Speech About The Economic “Recovery” Results In Mass Audience Exodus (ZeroHedge, Oct 20, 2014):

Yesterday, Obama made a rare campaign trail appearance in Maryland where he spoke in support of Democratic candidate for governor, Anthony Brown, proceeded with his usual bulletin of reading fabricated economic data off the teleprompter in which he highlighted improvements in US unemployment (if not the 46.5 million people on foodstamps or the 93 million Americans out of the labor force), a rebounding housing market (just as the bouncing dead cat is once again dead), the benefits of health insurance (if no mention of the disaster for small businesses that Obamacare now definitively is) a resurgent manufacturing sector (just don’t look at this chart) even if he did point out the unfairness of families having “two folks working”, and… a mass audience exodus followed.

This is how Reuters summarized it:

President Barack Obama made a rare appearance on the campaign trail on Sunday with a rally to support the Democratic candidate for governor in Maryland, but early departures of crowd members while he spoke underscored his continuing unpopularity.

Read moreObama’s Latest Speech About The Economic ‘Recovery’ Results In Mass Audience Exodus

Living The Grecovery Dream: Two Jobless Parents, Two Kids, One Cat All Living In A Car

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– Living The Grecovery Dream: Two Jobless Parents, Two Kids, One Cat All Living In A Car (ZeroHedge, Oct 20, 2014):

Squeezed between steering wheel, handbrake, door and dashboard, Katerina reads in her history book, takes notes for school. Next to her, on the driver’s seat, cat Eddy stares right in the camera lens. It may look like a cute snapshot on a sunny day, if it wasn’t for a sad detail: a withering spring stuck in a roll of toilet paper.  A distinctive memory of a former normal life that turned into a grim reality for a family of four.

At night the seat where Katerina sits during the day turns into a bed for her sister Fay. Cat Eddy cuddles with Katerina on the back seat. Father Nikos and mother Maria sleep in shifts on the driver’s seat. When the one parent is in the car, the other spends the night on a bench of the park where the car has been parked, on a side road of Irakleio suburb of West Athens. “It’s dangerous when it gets dark,” Maria says “we have to watch out.”

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Will Our Private Savings Be Sacrificed To Pay Down The Public Debt?

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– Dan Amerman: Will Our Private Savings Be Sacrificed To Pay Down The Public Debt? (Peak Prosperity, Oct 19, 2014):

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.

Read moreWill Our Private Savings Be Sacrificed To Pay Down The Public Debt?

The Real Bubble Isn’t Stocks … And It Will Make 2008 Look Like a Picnic

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– The Real Bubble Isn’t Stocks… and It Will Make 2008 Look Like a Picnic (ZeroHedge, Oct 2, 2014):

The 2008 crisis was just a warm-up.

The 2008 crisis was a banking and equities crisis. In the simplest terms, investment banks, leveraged to the hilt with garbage mortgage derivatives, became insolvent and began to collapse.

This collapse triggered a selling panic throughout the financial system as every financial entity questioned the quality of the assets backstopping its derivatives trades. The derivative market was over $700 trillion at the time. So just about every major global bank had broad exposure to this market.

Read moreThe Real Bubble Isn’t Stocks … And It Will Make 2008 Look Like a Picnic

Europe’s Fatal Flaw Laid Bare For All To See. Again.

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– Europe’s Fatal Flaw Laid Bare For All To See. Again. (The Automatic Earth, Oct , Oct 17, 2014):

markets, at the end of last week, sort of refound their – shaky – feet, oil up a dollar, EU exchanges up 3% or so, Greece even up over 7%, while interestingly gold didn’t move much at all during the wild week (no safe haven), and most movement was perhaps, through all the see-saw, in bonds. To sum up the week: panic followed by plunge protection teams. And now the ‘leaders’ hope plunge protection will save another day too.

And they may. Germany sinks a bit, but Germany is strong. US housing is at least not falling further, but US consumer spending stalls and drops. The deep dark weakness has not yet hit the big economies. But the nerves are back. Volatility is back with a vengeance. As it should. And that will paint the picture going forward, plunge protection or not. Da markets will come again and again and dare central banks to plunge protect.

Read moreEurope’s Fatal Flaw Laid Bare For All To See. Again.

Liberia collapses into ‘economic hell’ as panicked population abandons farm fields and factories

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– Liberia collapses into ‘economic hell’ as panicked population abandons farm fields and factories (Natural News, Oct 18, 2014):

Ebola is now spreading so fast in West Africa, and causing so much death so quickly, that the regional economy is on the verge of a total collapse. The Washington Post (WP) reports that Liberia, the hardest-hit Ebola country, is now teetering over a chasm of “economic hell,” as locals increasingly skip work to avoid infection.

Read moreLiberia collapses into ‘economic hell’ as panicked population abandons farm fields and factories

Because This Time Is Never Different, In 100 Year Old Cartoons

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– Because This Time Is Never Different, In 100 Year Old Cartoons (ZeroHedge, Oct 18, 2014):

Federal Housing Finance Agency Head Is Pushing Banks To Make Extremely Risky Home Loans

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– Mel Watt, Federal Housing Finance Agency Head, is Pushing Banks to Make Extremely Risky Home Loans (Liberty Blitzkrieg, Oct 16, 2014):

Mel Watt is one of the most dangerous financial oligarch puppets operating in America today. The first time he came across my radar screen was back in 2009, when he “gutted” Ron Paul’s End the Fed bill while it was in subcommittee, something I outlined in the post: Leverage in PE Deals Soars Despite Fed Warnings; Amidst Insatiable Demand for Risky Fannie Mae Debt.

Read moreFederal Housing Finance Agency Head Is Pushing Banks To Make Extremely Risky Home Loans

Welcome To Arcadia – The California Suburb Where Rich Chinese Stash Cash In McMansions

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– Welcome To Arcadia – The California Suburb Where Rich Chinese Stash Cash In McMansions (Liberty Blitzkrieg, Oct 16, 2014):

The city, population 57,600, projects that about 150 older homes—53 percent more than normal—will be torn down this year and replaced with mansions. The deals happen fast and are rarely listed publicly. Often, the first indication that a megahouse is coming next door is when the lawn turns brown. That means the neighbor has stopped watering and green construction netting is about to go up.

Arcadia is a concentrated version of what’s happening across the U.S. The Hurun Report, a magazine in Shanghai about China’s wealthy elite, estimates that almost two-thirds of the country’s millionaires have already emigrated or plan to do so.

– From the Bloomberg article: Why Are Chinese Millionaires Buying Mansions in an L.A. Suburb?

The surge in foreigners buying up U.S. real estate has been well documented in recent years. Of all this buying, no nation has demonstrated a bigger increase in purchases than China. In fact, it is estimated that 24% of all foreign purchases of domestic real estate this year have come from China, up 72% from last year. In my post from July, Chinese Purchases of U.S. Real Estate hit $22 Billion as The Bank of China Facilitates Money Laundering, I noted that:

In some California communities, 90% of real estate buyers are from China. Yes, 90%. Naturally, many of them are buying multi-million dollar homes in “all cash” transactions.

Read moreWelcome To Arcadia – The California Suburb Where Rich Chinese Stash Cash In McMansions

Forget About Ebola – Here’s Why US Banks (And Your Savings) Are Now EXTREMELY Vulnerable

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– Forget about Ebola – here’s why US banks (and your savings) are now EXTREMELY vulnerable (Sovereign Man, Oct 16, 2014):

For a casual observer of the US economy (most “experts”), you could say that things look pretty good. Unemployment is at its lowest rate in six years. Earnings of S&P 500 companies are higher than ever, while their debt is lower than it’s been in the last 24 years.

Nonetheless, rather than getting excited for good economic times, the big commercial banks are all battening down the hatches. They’re preparing for bad times ahead.

Read moreForget About Ebola – Here’s Why US Banks (And Your Savings) Are Now EXTREMELY Vulnerable

The IMF And Austrian Theory

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– The IMF And Austrian Theory ( Mises Canada,Oct 17, 2014):

Back in the early 1960s, financial journalist Henry Hazlitt warned against efforts to create an international system to help facilitate the smooth transfer of currencies. Representatives from the world’s leading governments were attempting to increase liquidity in global markets. They wanted to make sure the banking system and sovereign governments would never had a lack of funds. Hazlitt was not fooled. “In plain English” he wrote, “they are pushing for more world inflation.” His words, though accurate, went unheeded. The International Monetary Fund, which was established decades earlier, was to play a role in facilitating endless inflation.

Half a century later, the IMF has overseen a tumultuous business cycle that came to a screeching halt in 2008. Big, overleveraged banks were on the verge of collapsing; millions of people lost their jobs and their homes; governments spent billions of dollars to maintain their welfare safety nets. The end result, which is still ongoing, is stagnant economic growth with dim prospects for recovery.

Read moreThe IMF And Austrian Theory

Kudos To Bundesbank President Jens Weidmann For Uttering Three Truths In One Speech

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– Kudos To Herr Weidmann For Uttering Three Truths In One Speech (David Stockman’s Contra Corner, Oct 17, 2014):

Once in a blue moon officials commit truth in public, but the intrepid leader of Germany’s central bank has delivered a speech which let’s loose of three of them in a single go. Speaking at a conference in Riga, Latvia, Jens Weidmann put the kibosh on QE, low-flation and central bank interference in pricing of risky assets.

These days the Keynesian chorus in favor of policy activism is so boisterous that a succinct statement to the contrary rarely gets through – especially at Rupert Murdoch’s Wall Street yarn factory. But here’s what penetrated even Brian Blackstone’s filters:

“The biggest bottleneck for growth in the euro area is not monetary policy, nor is it the lack of fiscal stimulus: it is the structural barriers that impede competition, innovation and productivity,” he said.

Read moreKudos To Bundesbank President Jens Weidmann For Uttering Three Truths In One Speech

The Farce That Is Economics: Richard Feynman On The Social Sciences

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Related info:

– FBI Files On Famous Physicist Richard Feynman Released

Richard Feynman

– The Farce That Is Economics: Richard Feynman On The Social Sciences ( Sinclair & Co., Oct 18, 2014):

Richard Feynman on the Social Sciences

What do real scientists have to say about sciences that are not so real?

Born in 1918, Richard Feynman was an American theoretical physicist known for his work in a variety of fields where he made an immeasurable contribution, including quantum mechanics, quantum electrodynamics and particle physics. He was also credited with introducing the concept of nanotechnology, a breakthrough that holds so much promise today.

Read moreThe Farce That Is Economics: Richard Feynman On The Social Sciences