ZeroHedge RSS Feed

Pope: “Corruption Is a Greater Evil than Sin”

Modern interpretation of Christ driving the money changers from the temple by Anthony Freda/Daniel Zollinger

 

Preface: If you are an atheist (or adherent of another faith) and believe that the Catholic faith is crazy, you are obviously entitled to your belief.  But please remember that very few Americans are atheists … and the majority don’t trust atheists.  More importantly, it's wise to work with allies on core issues, such as fighting corruption ... even if you would normally disagree with them. 

In this case, the Pope just may speak for a lot of allies.  After all, there are more than a billion Catholics worldwide.  Some 85% of the American population identifies itself as Christian, and 78 million Americans have been baptized into the Catholic Church. The U.S. has the world's fourth largest Catholic population.
 

Legal authorities have done nothing to crack down on Wall Street corruption.  The U.S. government admits that it refuses to prosecute fraud … pretty much as an official policy.

Sure, a few "small fish" are indicted ... but the big boys go free.  Indeed, there are two systems of justice in Americaone for the Wall Street  fatcats, and one for everyone else.

In reality,  the government helped cover up the crimes of the big banks, used claims of national security to keep everything in the dark, and changed basic rules and definitions to allow the game to continue. See this, this, this and this.    Because fraudsters weren’t prosecuted and the banks weren’t broken up, the fraudsters are now committing bigger and bigger crimes, and banks are now bigger than ever … leaving the economy open to an even bigger crash than occurred in 2008.

Even the President of the New York Federal Reserve Bank has repeatedly said that bankers have to improve their ethics ... but to no avail.

Why isn't the government cracking down on corruption and fraud?  Because most government workers are themselves corrupt.

Yesterday, Pope Francis gave a powerful speech, directly addressing these problems (Google translate):

The scandalous concentration of global wealth is possible due to the connivance of public leaders with the powers that be. The corruption is itself a process of death ... when life dies, there is corruption.There are few things more difficult than opening a breach in a corrupt heart: "So is he who lays up treasure for himself and is not rich with God" (Luke 12:21). When the personal situation of the corrupt becomes complicated, he knows all the loopholes to escape as did the dishonest steward of the Gospel (cf. Lk 16.1 to 8).

 

The corrupt through life with shortcuts opportunism, with the air of one who says, "It was not me", coming to internalize his mask as an honest man. It's a process of internalization. The corrupt can not accept criticism, dismisses anyone who provides criticizes, tries to belittle any moral authority to question him, does not value the other and insults anyone who thinks differently.  If the balance of power permits, he  prosecutes anyone who contradicts him.

 

Corruption is expressed in an atmosphere of triumphalism because the corrupt fancies himself a winner. In that he struts to belittle others. The corrupt knows no fraternity or friendship, but complicity and enmity.

The corrupt does not perceive his corruption. It's a little like what happens with bad breath ... it's hard for those who have it to know, unless someone else tells them.

 

For this reason, the corrupt can hardly get out of their internal state by way of remorse of conscience. Corruption is a greater evil than sin. More than forgiven, this evil must be cured.

Corruption has become "natural" to the point of getting to statehood linked to personal and social custom, a common practice in commercial and financial transactions, in public procurement, in any negotiation involving State agents. It is the victory of appearances over reality ...

 

***

 

There are now many international conventions and treaties on the matter ... not so much geared to protect the citizens, who ultimately are the latest victims - particularly the most vulnerable - but how to protect the interests of operators of economic markets and financial companies.

 

The penalty is selective. It is like a net that captures only the small fish, while leaving the big [fish] free in the sea.

(Note: I tried to improve Google translate's rough translation. My Italian is rusty, and I would welcome a better translation from a fluent Italian speaker.)

What Does it Mean to Do God's Work?

The head of Goldman Sachs said he’s doing “God’s work” with his banking activities.

The head of Barclays also told his congregation that banking as practiced by his company was not antithetical to Christian principles.

Are they right? Is big banking as practiced by the giant banks in harmony with Christian principles?

Do Justice

Initially, the Bible does not counsel us to ignore the breaking of laws by the the powerful.

In fact, the Bible mentions justice over 200 times — more than just about any other topic. The Bible asks us to do justice and to stand up to ANYONE — including the rich or powerful — who do injustice or oppress the people.

Indeed, one of the first things God asks of us is to do justice:

He has told you, O man, what is good; and what does the Lord require of you but to do justice, and to love kindness, and to walk humbly with your God? (Micah 6:8)

While many churches and synagogues have become obsessed with other issues, many have arguably ignored this most important of God’s demands of us. As pointed out by a leading Christian ministry, which rescues underage girls trapped as sex slaves in third world countries:

In Scripture there is a constant call to seek justice. Jesus got upset at the Pharisees because they neglected the weightier matters of the law, which He defined as justice and the love of God . . . Isaiah 58 complains about the fact that while the people of God are praying and praying and praying, they are not doing anything about the injustice.

Should Christians just pray for justice and leave the rest to God?

That’s not what the Bible asks us to do. Instead, Hebrews 11:33 tells us that we are God’s hands for dispensing justice, and God uses us to “administer justice.”

We have to “walk our talk” and put our prayers into action.

God demands that we do everything in our power to act as “God’s hands” in bringing justice. And as Saint Augustine reminds us, “Charity is no substitute for justice withheld.”

Indeed:

The Lord looked and was displeased that there was no justice. He saw that there was no one, He was appalled that there was no one to intervene. (Isaiah 59:15-16)

This is the only place in the Bible where the word “appalled” is used for the way God feels — in other words, the only thing which we know God is appalled by is if people are not doing justice.

There are hundreds of other references to justice in the Bible, including:

  • Blessed are they who maintain justice . . . . (Psalm 106:3)
  • This is what the LORD says: Maintain justice and do what is right . . . . (Isiah 56:1)
  • This is what the LORD says: Do what is just and right. (Jeremiah 22:3,13-17)
  • Follow justice and justice alone. (Deuteronomy 16:19, 20)
  • For the LORD is righteous, he loves justice . . . . (Job 11:5,7)
  • Learn to do right! Seek justice . . . . (Isaiah 1:17)

So if the powerful players in the giant banks broke the laws, they must be held to account.

Fraud and Manipulation of Money

The big banks have engaged in systemic, continuous ongoing criminal fraud.

Allowing the banks to commit crime with impunity is not what Jesus would do. What would Jesus do? Turn over the tables of the money-changers. (economists agree.)

Moreover, the giant banks manipulate currency through the use of schemes such as manipulating interest rates (gaming interest rates in different regions – Libor, Eurobor, etc. – can in turn drive their currencies up or down), high frequency trading and artificially suppressing gold prices (which artificially inflates the value of fiat money) .

As Ron Paul notes, the Bible forbids altering the quality of money (which, at the time and place, was entirely in the form of coins):

Even the Bible is clear that altering the quality of money is an immoral act. We are instructed to follow the rules of “just weights and measures.” “You shall do no injustice in judgment, in measurement of length, weight, or volume. You shall have just balances, just weights, a just ephah, and a just hin” (Leviticus 19:35-36). “Diverse weights are an abomination to the LORD, and a false balance is not good” (Proverbs 20:23). The general principle can be summed as “You shall not steal.”

Proverbs 11:1 also provides:

Dishonest scales are an abomination to the LORD, but a just weight is His delight.

So to the extent that the giant banks have engaged in any dishonest acts or the manipulation of currencies, they are violating scripture.

Oppression of the Poor

The Bible condemns oppression of the poor for the benefit of the affluent:

He that oppresses the poor to increase his riches, and he that gives to the rich, shall surely come to want. (Proverbs 22:16)

To the extent that the giant banks have oppressed the poor to increase their riches, they are violating scripture.

Due to their looting, inequality is now worse in American than in Egypt, Tunisia, Yemen, most Latin American banana republics … and ancient Rome.

Waging War

Bankers are often the driving force behind war. "Blessed are the peacemakers" (Matthew 5:9), and Jesus would not have taken kindly to waging wars for profit based upon false pretenses.

Jesus Was Killed for Standing Up to Corruption

Reverend Howard Bess notes:

Jesus did not go to the temple to cleanse. He came to the temple to announce the destruction of a whole way of life. Those who operated the temple had no power to silence Jesus and put him to death. Those powers were held by the Roman retainers.

 

The charges that were leveled against him can be summed up as insurrection. There were three specific charges: encouraging non-payment of taxes, threatening to destroy property (the temple), and claiming to be a king. It was the temple incident that took Jesus from being an irritating, but harmless country rebel from the rural north to a nuisance in a city that controlled the great tradition. Rome’s retainers killed him on a cross.

In other words, Jesus wasn't sentenced to death until he challenged the money changers.

Resurrection: Christ's Ministry

Christ - and his ministry - lives to the extent that we act as God's hands to confront the big banks which are warping our economy and our world.

But Isn't the Economy Still Too Fragile?

Shouldn't we wait until the economy is stronger before prosecuting fraud?

Nope ...

Ecclesiastes 8:11 notes:

When the sentence for a crime is not quickly carried out, people’s hearts are filled with schemes to do wrong.

Nobel prize winning economists agree.

Postscript: Not all bankers are bad people. For example, many bankers at smaller banks and credit unions are good people who are trying to help their communities. Each must be judged by his or her own acts.








The American Dream Is Still Possible, Just Not In The US

Submitted by Ron Holland via The Daily Bell,

Although there are no firm statistics on the number of Americans living outside the US, the US State Department estimates that somewhere between 3 and 6 million Americans now live offshore. I think this is a low estimate and the number is clearly growing.

I now live in Canada but often travel back to the United States. Driving through Customs near Buffalo is usually not a big ordeal but it does involve a time-wasting delay much like visiting the post office or any other US government bureaucracy. But governments should police their borders, as this is one of the few legitimate functions of a central government.

Still, whenever I'm there I do notice the America I grew up in and once knew has really changed since 9/11. The trend toward a more militarized and aggressive police force continues to quicken. I know most Americans accept this as part of the consequences of the War on Terror just as they do the loss of financial privacy, increased fines and asset seizures.

The Canadian government recently warned citizens to be careful when taking cash to the US because of the risk of police taking their cash for hyped-up offenses. Did you know that in the last 13 years, over $2.5 billion has been stolen by law enforcement in almost 62,000 cash seizures? I have to say that as an American, I'm outraged at the situation and always on guard when in the USSA.

I fear many Americans who don't travel internationally might have become somewhat immune to the intrusive, arbitrary nature of today's American government and its institutions. Here in Canada, law enforcement is almost always professional and courteous and even the bureaucrats are friendly and helpful, which simply amazes me.

So to my American family, friends and business associates, I want you to know it is still possible to achieve the American Dream of a simple life with opportunity for wealth creation, fun, freedom and good times without an overly intrusive, threatening government ... just not in the United States. Many other nations, in Central and South America and elsewhere, certainly also experience corruption and inefficiencies but government threats remain outside of everyday life for most citizens and expats.

Following are a few things I've noticed recently pertaining to international real estate and lifestyle decisions many people are considering, ranging from a new presidential executive order to mouth-watering Austrian chalets.

I mention the latest presidential executive order not because it concerns your lifestyle or real estate but because this is how you are likely to lose more liberties, have your gold confiscated or your bank safe deposit box frozen during a future real or contrived crisis. Roosevelt used this governmental tool to illegally confiscate private gold in 1933 and there is no immediate defense or remedy to a presidential executive order. Yes, Congress can act over time but exactly how this would help after the fact is a question no one can answer.

When retiring overseas, many countries require a minimum pension or retirement income in order receive the coveted benefits of expat retirement and your Social Security benefits can be all or part of this package. Therefore, leaving the US does not mean you lose your "promised but not guaranteed" Social Security benefits ... at least not until Congress starts to "means test" Social Security in order to end benefits to the wealthy and middle class. It is possible to continue to receive your benefits. Read more here.

A couple of weeks ago I was flying back to Canada from a Casey Research conference in historic San Antonio, TX. The American Airlines flight magazine had an excellent article on the radical transformation of Colombia from a crime haven to a tourist haven and now the toast of South America. I have visited Colombia several times recently and you must put this exciting country on your bucket list for a visit. Read about it in "A Radical Transformation."

I don't have a compulsive bone in my body except for being on time and I unrealistically expect everyone else to be on time. This is a minor problem for me in the United States, Canada or Europe – other than in Switzerland where everyone and everything is done in a timely manner. But in Central and South America, nothing happens by the clock. This is something potential expats and others considering living in Latin cultures will want to be aware of. While this article focuses on Ecuador, it provides excellent insight into the entire region.

The Colombia economy is booming and is viewed increasingly by international investment managers as a good candidate for global diversification. The earlier long years of political upheaval and guerilla violence means that much of the reserves of this resource rich country including oil, gold and coal have not been explored and the reserves are still unaccounted for. Read what the NASDAQ has to say about the country at "Colombia Represents A New Vision in South America."

Of course, going offshore isn't restricted to the lower cost, tropical venues of Central and South America. Some people may enjoy the opportunities for cold weather sports and the history of a wonderful country like Austria. Think of Austria as similar to Switzerland or Germany but a place where locals and visitors alike have a lot more fun. While Austrian real estate is not a bargain as it still is in South America, compared to Switzerland it is an excellent value. Here are a few chalets to tempt your wandering eye.

The opportunities still available are truly amazing and I encourage you to takes steps to ensure your lifestyle and wealth now, while you can.








Putin Warns Of Risk Of Major Conflict, Says Dollar Losing Reserve Currency Status

Having been relatively quiet for a while, Russia's leader Vladimir, speaking in Sochi (following meetings with Middle East crown princes who confirmed Russia as a key partner - "isolated"?), has unleashed his most aggressive statements with regard the failing world order:

  • *PUTIN SAYS U.S. DOLLAR LOSING TRUST AS RESERVE CURRENCY
  • *PUTIN: WORLD WITHOUT RULES IS POSSIBILITY; ANARCHY GROWING

Adding that the risk of major conflicts involving major countries is growing, as well as the risk of arms control treaties being violated, Putin exclaimed that the US-led unipolar world is like a dictatorship over other countries and that "US leadership brings no good for others," and calls for a new global consensus.

 

Having met Crown Prince Al Nahyan of Abu Dhabi in Sochi, who confirmed that Moscow “plays a very important role in the Middle East," and added that he had no doubts that his country and Russia “are bound by a privileged relationship," it appears Russia is less "isolated" than the West would have many believe.

As Bloomberg reports:

  • *PUTIN SPEAKS AT MEETING OF VALDAI CLUB IN SOCHI
  • *PUTIN SAYS WORLD GROWING LESS SECURE, PREDICTABLE
  • *PUTIN SAYS NO GUARANTEE OF GLOBAL SECURITY
  • *GLOBAL SECURITY SYSTEM IS WEAK, DEFORMED: PUTIN
  • *COLD WAR ENDED WITHOUT PEACE BEING ACHIEVED: PUTIN
  • *PUTIN SAYS COLD WAR `VICTORS' DISMANTLING INTL LAWS, RELATIONS
  • *U.S. HAS WORSENED DISBALANCE IN INTL RELATIONS: PUTIN
  • *PUTIN SAYS U.S.  ACTING LIKE NOUVEAU RICHE AS GLOBAL LEADER
  • *PUTIN SAYS WORLD LEADERS BEING BLACKMAILED BY `BIG BROTHER'
  • *U.S. LEADERSHIP BRINGS NO GOOD FOR OTHERS: PUTIN
  • *PUTIN SEES GLOBAL MEDIA UNDER CONTROL, UNDERMINING TRUTH
  • *PUTIN SAYS WEST CLOSED EYES TO INTL TERRORISM ENTERING RUSSIA
  • *PUTIN CALLS U.S. SELF-APPOINTED LEADER
  • *PUTIN: UNIPOLAR WORLD LIKE DICTATORSHIP OVER OTHER COUNTRIES
  • *PUTIN SAYS MANY COUNTRIES DISENCHANTED W/ GLOBALIZATION: PUTIN
  • *PUTIN SAYS U.S. DOLLAR LOSING TRUST AS RESERVE CURRENCY
  • *RUSSIA WON'T BEG FOR ANYTHING: PUTIN
  • *SANCTIONS UNDERMINING WORLD TRADE ORGANISATION RULES: PUTIN
  • *RUSSIA ISN'T WALLING ITSELF OFF FROM WORLD, PUTIN SAYS
  • *RUSSIA READY FOR DIALOGUE ON NORMALIZING ECONOMIC TIES: PUTIN
  • *PUTIN: WORLD WITHOUT RULES IS POSSIBILITY; ANARCHY GROWING
  • *PUTIN CALLS FOR NEW GLOBAL CONSENSUS, INTERDEPENDENCE
  • *PUTIN: CONTINUED USE OF FORCE IN UKRAINE MAY LEAD TO DEAD END
  • *PUTIN SAYS U.S. CAN'T HUMILIATE ITS PARTNERS FOREVER

*  *  *

Fighting talk?

*  *  *

Escalation? It seems sabre-rattling is picking up as The Washington Times reports,

Russian military provocations have increased so much over the seven months since Moscow annexed Crimea from Ukraine that Washington and its allies are scrambling defense assets on a nearly daily basis in response to air, sea and land incursions by Vladimir Putin’s forces.

 

Not only is Moscow continuing to foment unrest in Eastern Ukraine, U.S. officials and regional security experts say Russian fighter jets are testing U.S. reaction times over Alaska and Japan’s ability to scramble planes over its northern islands — all while haunting Sweden’s navy and antagonizing Estonia’s tiny national security force.

 

 

“What’s going on is a radical escalation of aggressive Russian muscle flexing and posturing designed to demonstrate that Russia is no longer a defeated power of the Cold War era,” says Ariel Cohen, who heads the Center for Energy, National Resources and Geopolitics at the Institute for the Analysis of Global Security in Washington.

 

“The more we retreat, the more we are encouraging Russia to behave in a more aggressive way,” Mr. Cohen said. “We need to be engaging more deeply with our Central Asian allies, but instead we are in the process of abandoning turf to Russia, and it’s wrong — it’s against our interests geopolitically to let Russia feel that they all of a sudden have won all the turf without firing a shot.”

*  *  *








The Farce Of European Stocks (In 1 Simple Chart)

If, as the smart chaps on financial media continuously remind hungry investors, "earnings are the mothers milk of stock market rallies" then WTF is going on in the chart below... (Hint: "perenially too optimistic")

 

 

As ValueWalk's Michael Ide notes,

European equities had their 42nd straight month of earnings downgrades in September, with an average of 100 downgrades per working day since March 2011, says a recent report from UBS. That’s not quite as bad as Japan’s 51-month downgrade streak in the early nineties, and fortunately there are signs that estimates could finally turn around.

 

“Bottom-up consensus earnings estimates have tended to be perennially too optimistic across many Global Equity markets. But even by these standards, the sheer persistence of downgrades in Europe over recent years has been dramatic,” write UBS strategists Nick Nelson and Karen Olney.

*  *  *

Dramatic, persistent, irrelevant... as long as Draghi keeps the dream alive








50% Of American Workers Make Less Than $28,031 A Year

Submitted by Michael Snyder of The Economic Collapse blog,

The Social Security Administration has just released wage statistics for 2013, and the numbers are startling.  Last year, 50 percent of all American workers made less than $28,031, and 39 percent of all American workers made less than $20,000.  If you worked a full-time job at $10 an hour all year long with two weeks off, you would make $20,000.  So the fact that 39 percent of all workers made less than that amount is rather telling.  This is more evidence of the declining quality of the jobs in this country.  In many homes in America today, both parents are working multiple jobs in a desperate attempt to make ends meet. Our paychecks are stagnant while the cost of living just continues to soar.  And the jobs that are being added to the economy pay a lot less than the jobs lost in the last recession.  In fact, it has been estimated that the jobs that have been created since the last recession pay an average of 23 percent less than the jobs that were lost.  We are witnessing the slow-motion destruction of the middle class, and very few of our leaders seem to care.

The "average" yearly wage in America last year was just $43,041.  But after accounting for inflation, that was actually worse than the year before...

American paychecks shrank last year, just-released data show, further eroding the public’s purchasing power, which is so vital to economic growth.

 

Average pay for 2013 was $43,041 — down $79 from the previous year when measured in 2013 dollars. Worse, average pay fell $508 below the 2007 level, my analysis of the new Social Security Administration data shows.

 

Flat or declining average pay is a major reason so many Americans feel that the Great Recession never ended for them. A severe job shortage compounds that misery not just for workers but also for businesses trying to profit from selling goods and services.

 

Average pay declined in 59 of the 60 levels of worker pay the government reports each October.

And please keep in mind that "average pay" is really skewed by the millionaires and billionaires at the top end of the spectrum.

Median pay in 2013 was just $28,031.02.  That means that 50 percent of American workers made less than that number, and 50 percent of American workers made more than that number.

Here are some more numbers from the report that the Social Security Administration just released...

-39 percent of American workers made less than $20,000 last year.

 

-52 percent of American workers made less than $30,000 last year.

 

-63 percent of American workers made less than $40,000 last year.

 

-72 percent of American workers made less than $50,000 last year.

I don't know about you, but those numbers are deeply troubling to me.

It has been estimated that it takes approximately $50,000 a year to support a middle class lifestyle for a family of four, and so the fact that 72 percent of all workers make less than that amount shows how difficult it is for families that try to get by with just a single breadwinner.

The way that our economy is structured now, both parents usually have to work as hard as they can just to pay the bills.

But there was one group of Americans that did see their incomes actually increase last year.

Those making over 50 million dollars had their pay increase by an average of $12.8 million in 2013.

For everyone else, the news was not good.

And of course this is a trend that has been going on for a long time.

Posted below is a chart that comes from the Federal Reserve.  It shows how real median household income in the United States has declined since the year 2000...

 

Meanwhile, the cost of living has continued to rise at a steady pace.

Needless to say, this is putting a tremendous squeeze on the middle class.  With each passing day, more Americans are losing their spots in the middle class and this has pushed government dependence to an all-time high.  According to the U.S. Census Bureau, 49 percent of all Americans now live in a home that receives money from the government each month.  This is completely and totally unsustainable, but our long-term economic problems just keep getting worse.

Our politicians have stood by as millions upon millions of good paying jobs have been shipped out of the country.  Millions of other middle class jobs have been lost to technology.  This has resulted in intense competition for the middle class jobs that remain.

And at this point we are even losing lots of lower paying retail jobs.  For example, it is being reported that Sears plans to close 110 more stores and lay off more than 6,000 workers.  Sears says that the report "isn't accurate", but it isn't denying that stores will be closed either...

In an email to USA Today, Sears spokesman Howard Riefs said the store count and closures "isn't accurate,'' but did not provide store closures or layoff numbers.

 

"As we stated in our (second quarter earnings report), we disclosed that we would be closing unprofitable stores as leases expire and in some cases will accelerate closings when it is economically prudent. And that we would consider closing additional stores during the remainder of the year,'' Riefs said. "Make no mistake, we believe the store will continue to play an integral role in our transformation, however, if a store is not generating a profit, it is straightforward that the store should be considered for closure."

No matter how many stores Sears does end up closing over the next few months, the truth is that our economy is a complete and total mess at this point.

Our politicians and the mainstream media are trying to put a happy face on everything, but the cold, hard numbers prove that we are not anywhere close to where we were prior to the last recession.

Because it is so difficult to find a good job in America today, I often recommend to people that they should consider starting their own businesses.

But thanks to the bureaucratic control freaks in the Obama administration and in our state governments, small business ownership in America today is at an all-time low.  It is almost as if they don't want the "little guy" to win.  Every avenue of prosperity for the middle class is under assault, and there does not appear to be much hope that this will change any time soon.

And the truly frightening thing is that this is about as good as things are going to get for the middle class.  We are rapidly approaching the next major wave of our long-term economic decline, but that is a topic for a future article.








Yale Researcher: 12% Of Liberia's Most Populous County May Have Ebola By December 15

For all the headline fodder surrounding the arrival of Ebola in the US, or any other developed nation for that matter, the key issue surrounding the worst Ebola epidemic in history has little to do with what the virus is doing on the western side of the Atlantic, and everything to do with containing the source of contagion on the eastern side.

It is this issue that a paper in today's edition of The Lancet: Infectious Diseases tackles. It's conclusion:

The number of beds at EVD treatment centres needed to effectively control EVD in Montserrado substantially exceeds the 1700 pledged by the USA to west Africa. Accelerated case ascertainment is needed to maximise effectiveness of expanding the capacity of EVD treatment centres. Distributing protective kits can further augment prevention of EVD, but it is not an adequate stand-alone measure for controlling the outbreak. Our findings highlight the rapidly closing window of opportunity for controlling the outbreak and averting a catastrophic toll of EVD cases and deaths.

The authors do not specify if the catastrophic toll would impact only Africa, but they don't have to: as long as the original epidemic continues unabated and in fact grows larger, the risk of a carrier sliding undetected into any developed nation rises exponentially.

The Yale News summarizes the full paper:

The Ebola virus disease epidemic already devastating swaths of West Africa will likely get far worse in the coming weeks and months unless international commitments are significantly and immediately increased, new research led by Yale researchers predicts.

The findings are published in the Oct. 24 issue of The Lancet Infectious Diseases.

A team of seven scientists from Yale’s Schools of Public Health and Medicine and the Ministry of Health and Social Welfare in Liberia developed a mathematical transmission model of the viral disease and applied it to Liberia’s most populous county, Montserrado, an area already hard hit. The researchers determined that tens of thousands of new Ebola cases — and deaths — are likely by Dec. 15 if the epidemic continues on its present course.

“Our predictions highlight the rapidly closing window of opportunity for controlling the outbreak and averting a catastrophic toll of new Ebola cases and deaths in the coming months,” said Alison Galvani, professor of epidemiology at the School of Public Health and the paper’s senior author. “Although we might still be within the midst of what will ultimately be viewed as the early phase of the current outbreak, the possibility of averting calamitous repercussions from an initially delayed and insufficient response is quickly eroding.”

The model developed by Galvani and colleagues projects as many as 170,996 total reported and unreported cases of the disease, representing 12% of the overall population of some 1.38 million people, and 90,122 deaths in Montserrado alone by Dec. 15. Of these, the authors estimate 42,669 cases and 27,175 deaths will have been reported by that time.

Much of this suffering — some 97,940 cases of the disease — could be averted if the international community steps up control measures immediately, starting Oct. 31, the model predicts. This would require additional Ebola treatment center beds, a fivefold increase in the speed with which cases are detected, and allocation of protective kits to households of patients awaiting treatment center admission. The study predicts that, at best, just over half as many cases (53,957) can be averted if the interventions are delayed to Nov. 15. Had all of these measures been in place by Oct. 15, the model calculates that 137,432 cases in Montserrado could have been avoided.

There have been approximately 9,000 reported cases and 4,500 deaths from the disease in Liberia, Sierra Leone, and Guinea since the latest outbreak began with a case in a toddler in rural Guinea in December 2013. For the first time cases have been confirmed among health-care workers treating patients in the United States and parts of Europe.

“The current global health strategy is woefully inadequate to stop the current volatile Ebola epidemic,” co-author Dr. Frederick Altice, professor of internal medicine and public health added. “At a minimum, capable logisticians are needed to construct a sufficient number of Ebola treatment units in order to avoid the unnecessary deaths of tens, if not hundreds, of thousands of people.”

Other authors include lead author Joseph Lewnard, Martial L. Ndeffo Mbah, Jorge A. Alfaro-Murillo, Luke Bawo, and Tolbert G. Nyenswah.

The National Institutes of Health funded the study.








The World Series Of Real Estate

With The Royals and The Giants flip-flopping scores like an HFT-trader on FOMC day, we thought a glance at the two teams' local real estate markets might give some context for who comes out the weekend the winner... As RealtyTrac notes, the San Francisco Giants may have one of the most Equity Rich real estate regions, but the Kansas City Royals hit a home run with home prices.

 

 

Source: RealtyTrac








Martin Armstrong On The Danger Of Conspiracy Theories

Submitted by Martin Armstrong via Armstrong Economics blog,

 

If you want to hide something in plain view, exaggerate it to the point it becomes extreme and convert it to a conspiracy theory. This is a very standard in how to create propaganda and if you keep saying a lie, its becomes the truth to many without ever having to prove anything. To uncover the truth, takes digging. This I have discovered both in politics as well as market fundamentals.

The two big conspiracy theories to be exaggerated that cover up the truth are the 911 WTC Attack and the Kennedy Assassination. With the former, people take it to the extreme and claim there was not even an attack by terrorists and the whole thing was made up. Sorry, there was an attack and the government knew it was coming and allowed it to for three purposes

  • (1) eliminate the evidence on many cases in WTC7 including all my evidence that documented EVERY  market manipulation up to 1999 by the investment banks et al for which they are getting fined all the time today
  • (2) wipe out the evidence that would have exposed the missing $2 trillion in the Pentagon budget, and
  • (3) generate more power for government by allowing Americans to be victims as originally proposed in Operation Northwoods.

Now, that is far closer to the truth than claiming there was no Middle East terrorists involved at all, Strange, for that does not jive with Saudi Arabia threatening Russia with terrorism or the funding of ISIS to overthrow Syria which has now overthrown most of Iraq.

 

Then there is the Kennedy Assassination spun to be the product of the Mafia or with Oswald’s Russian connection. Eisenhower in his Farewell Address warned of the vast military complex that had grown out of World War II employing over 3 million people. There was no such industry before that war and the view was now Communism would take the world. My father was a Colonel under General Patton and you to tell me all the time about him as a child how he read the books of his opponent and how he accurately predicted that the real enemy would be Stalin and wanted to go all the way to Moscow.

In the Third 1960 Presidential Debate, Kennedy exposed the truth behind the decline in the Bretton Woods System – it was the vast expenditure on the military. Her said:

Now on the question of gold. The difficulty, of course, is that we do have heavy obligations abroad, that we therefore have to maintain not only a favorable balance of trade but also send a good deal of our dollars overseas to pay our troops, maintain our bases, and sustain other economies. 

The price of silver was rising and Kennedy set in motion the withdraw of silver from the monetary system. This too has been spun into a conspiracy theory  Here they have spun JFK’s Executive Order 11110 into the Federal Reserve killed Kennedy because he was taking their power to print currency away. You just can’t get any more far-fetched than that one.

Simply put, JFK also said the US current account deficit could be stopped at any time if the government stopped expanding its military worldwide for that was sending dollars offshore. If anyone had a motive, it was the very same people behind the NSA abuse of power – not the Federal Reserve, Mafia, or Russians. Just follow the money and you get closer to the truth – i.e. Halliburton, Cheney and the Iraq War against a nation who was against religious fanatics, the very terrorists who attacked the USA – go figure that one out without following the money. We took out two dictators who kept religious fanatics in check -Saddam Hussein and Muammar al-Gaddafi.

BTW, as soon as Halliburton was to be investigated, they moved to Dubai. Just follow the money.








When The Line Between Halloween & Real Life Terror Gets Blurred

Taking inspiration from the fear of Ebola, AP reports that a Dallas-area man has stacked up barrels marked "biohazard," surrounded his yard with yellow caution tape and crossed his door and windows with white tape marked "quarantine."

 

 

"There's negative people everywhere and they are going to give me grief about it but it's all in good fun," James Faulk told reporters Thursday while standing outside his home wearing a face shield and white protective suit with the label "CDC Trainee" and d gripping a clipboard and red plastic bag marked "biohazard infectious waste."

 

 

"So the next step is: Let's have fun on Halloween and scare some people in the process," said Faulk, who on Thursday added a banner reading "Happy Halloween."

 

 

University Park spokesman Steve Mace said police so far have gotten just one call about the house and an officer drove by to check out the situation. He said no laws were being broken.

 








Spanish Tenants Wake Up To The Horror Of A Wall Street Landlord

Having grown weary of reality in America (after becoming the biggest landlord in the land of the free to borrow cheaply), Wall Street moved into the distressed property purchase ponzi in Spain (as we noted here) and, surprise, the Spanish are not happy with their new slumlords. After Madrid's local government sold 5,000 rent-controlled apartments to Goldman and Blackstone, having told tenants their rental conditions would remain the same, dozens of people have received demands for higher rent, been told their rents will increase dramatically, been threatened with eviction or moved out to escape the insecurity as old contracts expire.

 

As Reuters reports,

Last year Madrid’s city and regional governments sold almost 5,000 rent-controlled flats to private equity investors including Goldman Sachs and Blackstone. At the time, the tenants were told their rental conditions would remain the same.

 

But as old contracts expire, dozens of people have received demands for higher rent, been told their rents will increase dramatically, been threatened with eviction or moved out to escape the insecurity. Thousands of Spain’s poor now depend for their homes on the generosity of private equity.

 

...

 

In the buildings sold to the funds, Reuters has spoken to more than 40 households who face similar difficulties. They include some of Madrid’s most vulnerable people: an unemployed single mother of five with a severely disabled daughter, for example, and an HIV patient with one lung. Both faced evictions that were temporarily halted at the last minute.

 

There is no suggestion the buyers have acted illegally. Having bought around 15 percent of Madrid’s publicly held social housing, the new owners are simply exercising their right to charge commercial rents once reduced rents that tenants have paid expire.

 

However, Socialist councillors in Madrid have launched lawsuits directed at the state bodies that sold the rent-controlled homes, and tenants meet weekly to organize street protests. Evictions ordered and postponed by the new owners are an increasingly common sight in Spain’s media.

For the private equity firms that bought the flats, the deal was good business. For tenants, less so.

The public-sector real estate workout is creating winners and losers. Spain needs new investment to put a floor under its property market - a necessary condition for a broader recovery - and at the same time its social safety net needs funds. Economist Miguel Hernandez said foreign investors play an important role by providing cash to public institutions.

 

“These funds may appear to be acting like vultures, but they are also helping the system, because the administrations had very few options to get the cash they needed,” said Hernandez, professor at IE Business School.

 

...

 

Six sources involved in the bidding process told Reuters that bidders knew the straitened circumstances of the tenants. The funds that entered final bidding – nine in all – were given detailed information. The sale terms, seen by Reuters, show the regional government stressed that the new owners must honor all the tenants’ rights and obligations.

 

Goldman went for the Madrid homes after a successful pair of similar deals in Germany, a person familiar with the matter said. Goldman looked at the profiles of the tenants and considered whether the properties were “under-managed from a yield perspective” and whether new ownership could “improve rents.”

 

Read more here...

Here is Mike Krieger explaining how it works...

See how this game works? Financial oligarchs always get access to free money from Central Banks, as well as discounts during privatizations, and then turn around and demand the plebs pay the market rate.

Unemployed hairdresser and mother-of-three Yasmin Rubiano lives in a flat now owned by Goldman and Azora. Rubiano said she stopped getting a printed rent bill once her reduced rent of 50 euros per month ended in December, but got no word from the new owners.

 

In January she started to receive monthly text messages from her bank, which she showed a reporter, advising that it had received a demand for 498.18 euros. She has been paying 100 euros a month to show goodwill, but cannot pay more. In March, Rubiano said, she received a letter from Encasa Cibeles demanding full payment or threatening legal action.

 

On Aug. 6, the 20 tenants in Arriba’s block signed new contracts with Fidere, some of them seen by Reuters, which stipulate a rise of more than 40 percent in rent over three years. Blackstone referred inquiries to Fidere.

 

Some local politicians say IVIMA acted illegally by selling the flats cheap. IVIMA Director Ana Gomendio declined to comment.

Wolves will always eat sheep, and until the sheep decide enough is enough, the wolves will continue to feast.

*  *  *
The irony, of course, is that Spain has been boasting about its housing recovery because Blackstone and Goldman have been buying cheap real estate hand over first. The problem is that now they are sending out the eviction notices. Let's see how this works out for Rajoy...

With youth unemployment at record highs, corruption allegations against the Prime Minister, and regions seeking secession, it appears Goldman and Blackstone may be just the tinder to start more social unrest as reality starts to bite that a recovery never happened.








New York, New Jersey Begin Mandatory Quarantines In Ebola Response

Despite the constant confirmation that New York "is prepared, and has been prepared for months" for an Ebola outbreak (that is extremely difficult to catch apparently), it appears Governor Cuomo and NJ's Christie are more concerned than they are letting on. Having earlier admitted that the CDC's screening guidelines are "insufficient" for New York regions' population density, Reuters reports that Cuomo and Christie are considering "enhanced screening" where "all healthcare workers will be mandatorily quarantined." Cue "state of emergency" proclamation and civil liberties 'interrupted'...

  • *EBOLA SCREENING WILL BE STRENGTHENED AT NY AIRPORTS, SAYS CNBC
  • *NY AIRPORT SCREENING WILL GO BEYOND CDC REQUIREMENTS: CNBC
  • *NY AIRPORTS TO QUARANTINE ALL HC WORKERS FROM HI RISK NATIONS
  • *JFK, NEWARK TO HAVE ADDITIONAL SCREENING FOR EBOLA: CHRISTIE
  • *STEPS INCLUDE MANDATORY QUARANTINE FOR MED. SERVICE PROVIDERS
  • *MEDICS BACK FROM EBOLA COUNTRIES TO BE QUARANTINED: CHRISTIE
  • *NEWARK, JFK HEALTH DEPTS.TO DETERMINE QUARANTINE NEEDS:CHRISTIE

*  *  *

Governors Cuomo & Christie explain how its for your own good... but it's not very congaious and really hard to catch... etc.

*  *  *

As CNBC reports,

New York Governor Andrew Cuomo announced Friday that he and New Jersey Governor Chris Christie are planning to increase current screening procedures for people travelling from Ebola-affected regions.

 

Depending on an individual's risk level—exposure to infected individuals and countries visited—a mandatory 21-day quarantine could be instituted, Cuomo said.

 

All medical workers from Ebola-affected countries will be subject to a quarantine, said Dr. Howard Zucker, acting commissioner of health for New York State. Cuomo said voluntary quarantine is not sufficient, and that it is "almost an oxymoron."

 

"In an region like this, you go out one, two, or three times—you ride the subway, you ride a bus—you could affect hundreds and hundreds of people," Cuomo added.

 

"There is no reason for undue concern or undo anxiety under this situation," the New York governor said. "I believe this adjustment and increasing the screening procedures is necessary. I think it reduces the risk to New Yorkers and the residents of New Jersey."

 

Christie indicated that authorities have already stopped one traveler in Newark.

 

Cuomo said that he and Christie believe it is a state's right to protect their borders, and he indicated that the governors have been in touch with the Centers for Disease Control and Prevention. He added he believed the CDC's procedures are "not rigorous enough."

 

Christie said the measures are "necessary to protect public health."

"CDC's guidance is continually changing, and we need to set a standard for our two states," Christie said. These new procedures have already been put in place at the Port Authority airports, Cuomo said.

And so it begins...

*  *  *

Additionally, Congressman Hakeem Jeffries (NY-8) released the following statement in the aftermath of the first confirmed case of Ebola in New York:

“In the wake of the first confirmed case of Ebola in New York City, the Obama administration must reassess the strength of the measures put into place to protect the health and safety of our residents. All options should be on the table in the fight against Ebola, including a possible ban on nonessential travel originating in the source West African nations.”

*  *  *

Of course, we warned this might happen -

If there is a major Ebola pandemic in America, all of the liberties and the freedoms that you currently enjoy would be gone.  If government officials believe that you have the virus, federal law allows them to round you up and detain you "for such time and in such manner as may be reasonably necessary."  In addition, the CDC already has the authority to quarantine healthy Americans if they reasonably believe that they may become sick.  During an outbreak, the government can force you to remain isolated in your own home, or the government may forcibly take you to a treatment facility, a tent city, a sports stadium, an old military base or a camp.  You would not have any choice in the matter.  And you would be forced to endure any medical procedure mandated by the government.  That includes shots, vaccines and the drawing of blood.  During such a scenario, you can scream about your "rights" all that you want, but it won't do any good.

In case you are tempted to think that I am making this up, I want you to read what federal law actually says.  The following is 42 U.S.C. 264(d).  I have added bold for emphasis...

(1) Regulations prescribed under this section may provide for the apprehension and examination of any individual reasonably believed to be infected with a communicable disease in a qualifying stage and (A) to be moving or about to move from a State to another State; or (B) to be a probable source of infection to individuals who, while infected with such disease in a qualifying stage, will be moving from a State to another State. Such regulations may provide that if upon examination any such individual is found to be infected, he may be detained for such time and in such manner as may be reasonably necessary. For purposes of this subsection, the term “State” includes, in addition to the several States, only the District of Columbia.

 

(2) For purposes of this subsection, the term “qualifying stage”, with respect to a communicable disease, means that such disease—

 

(A) is in a communicable stage; or

 

(B) is in a precommunicable stage, if the disease would be likely to cause a public health emergency if transmitted to other individuals.

In addition, as I discussed above, the CDC already has the authority to isolate people that are not sick to see if they do become sick.  The following is what the CDC website says about this...

Quarantine is used to separate and restrict the movement of well persons who may have been exposed to a communicable disease to see if they become ill. These people may have been exposed to a disease and do not know it, or they may have the disease but do not show symptoms. Quarantine can also help limit the spread of communicable disease.

*  *  *

 

Welcome to the new normal American police state.

*  *  *

Don't worry though - as this TV anchor says - just don't eat Ebola-infected shit!!!

 








5 Things To Ponder: To QE Or Not To QE

Submitted by Lance Roberts of STA Wealth Management,

Over the last few weeks, the markets have seen wild vacillations as stocks plunged and then surged on a massive short-squeeze in the most beaten up sectors of energy and small-mid capitalization companies. While "Ebola" fears filled mainstream headlines the other driver behind the sell-off, and then marked recovery, was a variety of rhetoric surrounding the last vestiges of the current quantitative easing program by the Fed. As I have shown many times in the past, there is a high degree of correlation between the Fed's liquidity programs and the advance in the markets.

This weekend's reading list is a compilation of views on whether the Fed will end the current QE program at next weeks FOMC meeting or not. In the past, the extraction of their monetary interventions has led to market declines that were halted only once a new program was started. Are the markets, and the economy, finally strong enough to stand on their own? Or, will the end of the current QE program be the start of a bigger correction?

Here is something to consider if you believe that the Fed will end their monetary purchases next week.  The chart below shows the recent sell-off and rebound matched to the Fed's current monetary interventions. 

What will happen when the Fed is absent altogether with just one round of purchases to go? ($1 billion on Monday)

 

1) Fed Official: End QE On Schedule by Robin Harding via Financial Times

"The comments by Mr Rosengren, an advocate for strong monetary stimulus in recent years, suggest there is limited support for a plan put forward by James Bullard, president of the St Louis Fed, to keep buying assets at a pace of $15bn a month until December.

 

Mr Rosengren said Fed asset purchases have achieved their stated goal, the jobs report for September is already in and his economic forecasts have not changed. 'There has been substantial improvement in labour markets,' he said. 'As a result I would be pretty comfortable [ending purchases] at the end of the month.'”

[Note: I wonder if the 94 million considered "not in labor force," the 34% out of work longer than 6-months, or the 49 million dealing with food insecurity would agree with Mr. Rosengren?]

Also Read: Fed Official Bullard Says Keep QE Alive by Robin Harding via Financial Times

Also Read: Fed Official Fisher: Correction Possible But QE End Needed by Matthew Belvedere via CNBC

 

2) The Fed Shouldn't End Its Stimulus Program Yet by Danny Vinik via New Republic

"Should QE end next Wednesday? That depends. The economy really has improved over the past year, so it makes sense for the Fed to adopt a more normal policy posture. At the same time, the economy is still far from full employment and wage growth is barely keeping up with inflation. Meanwhile, the outlook for the global economy worsened over the past month, with growth slowing in China, Japan and the Eurozone. Investors are worried that policymakers, particularly the European Central Bank, will not act aggressively if the economy slows down. Economists are also unsure how the Ebola outbreak could affect the economy."

Also Read: The Statistical Recovery Continues via Streettalklive

Also Read: Bond Market Braced For End To QE by Colleen Godo via Business Day

 

3) All The Markets Need Is $200 Billion A Quarter From Central Banks by Simon Kennedy via Bloomberg

"By estimating that zero stimulus would be consistent with a 10 percent quarterly drop in equities, they calculate it takes around $200 billion from central banks each quarter to keep markets from selling off.

 

Bank of America Merrill Lynch strategists said in a report today that another 10 percent decline in U.S. stocks might spark speculation of a fourth round of quantitative easing from the Fed. That would mimic how the Fed acted following equity declines of 11 percent in 2010 and 16 percent in 2011.

 

'With central banks much more concerned about a return to recession than about asset-price bubbles, they have little choice but to step back in,' said Citigroup."

 

4) How QE Contributed To The Nations Inequality Problem by William Cohan via NYT

"[Yellen] did a wonderful job highlighting the growing disparity between rich and poor and how it is beginning to impinge upon what it means to be an American, but she ignored the fact that, in many ways, the Fed’s policies have compounded the problem.

 

Quantitative easing adds to the problem of income inequality by making the rich richer and the poor poorer. By intentionally driving down interest rates to low levels, it allows people who can get access to cheap money on a regular basis to benefit in extraordinary ways."

Also Read: Let Them Eat Cake via ECRI

 

5) World Economy So Damaged It May Need Permanent QE by Ambrose Evans-Pritchard via The Telegraph

"We will find out soon whether or not this a replay of 1937 when the authorities drained stimulus too early, and set off the second leg of the Great Depression.

 

Crashes are another story. They signal global stress, doubly dangerous today because the whole industrial world is one shock away from a deflation trap, a psychological threshold where we batten down the hatches and wait for cheaper prices. That is the Ninth Circle of Hell in economics. Lasciate Ogni Speranza."

Also Read: "Plunge Protection Team" Behind Market's Sudden Recovery by John Crudele via NY Post

Bonus Read: The Fed's Bubble: "Overtrading" and "Discredit" Always End In Revulsion by Van Hoisington/Lacy Hunt via ZeroHedge

"In their 2014 book House of Debt. Chapter 8, entitled 'Debt and Bubbles,' Mian and Sufi demonstrate that increasing the flow of credit is extremely counterproductive when the fundamental problem is too much debt, and excessive debt can fuel asset bubbles.

 

Based on our reading of these two books we would define an asset bubble as a rise in prices that is caused by excess central bank liquidity rather than economic fundamentals. As Kindleberger clearly stated, the process of excess liquidity fueling higher prices in the face of faltering fundamentals can run for a long time, a phase Kindleberger called 'overtrading.' But eventually, this gives way to 'discredit', when the discerning few see the discrepancy between prices and fundamentals. Eventually, discredit yields to 'revulsion', when the crowd understands the imbalance, and markets correct."

“You will know that the financial markets have reached peak instability and volatility when Britney Spears rings the opening bell.”

Have a great weekend.








Stocks Shrug Off Ebola, Surge Most Since 2011, Still A Red October

Ebola in NYC, no problem. Crappy housing data, all good. School shooting in WA, buying opportunity... and that is how the S&P 500 broke back above its 100-day-moving-average (proving the world is fixed again), and had its biggest low-to-high swing since Dec 2011. It wasn't all great BTFD news today though as small caps underperformed - though still green (just like last Friday), and only Trannies and Russell are green in October. Despite equity exuberance, Treasuries rallied modestly today (ending the week up 8-9bps on the week). HY credit slightly underperformed stocks but compressed 27bps - the biggest weekly drop in spreads since July 2013. The USD rose for the first time in 3 weeks led by JPY and EUR weakness. Oil fell once again, copper rose (since China data), gold and silver mirrored USD's gains. VIX closed down 5 from last week's close just above 16, but like small cap, and JPY carry, decoupled this afternoon. The last 2 weeks were the biggest squeeze of "most shorted" stocks since July 2013.

For old time's sake... as we await the very last POMO (or not) on Monday...

*  *  *

Before we start... next week is last POMO and a press-conference-less FOMC statement... so why aren't bonds loving the growth implied by stocks? Especially if as everyone claims last week saw the capitulation of shorts... We note the 3 blue boxes where equity traders were wrong footed... and now we are back at that level...

 

*  *  *

Small Caps notably underperformed today...

The S&P had its best week since Jan 2013 and biggest 2-week low-to-high swing since Dec 2011...

 

Ripping back above its 100DMA...(and almost 50DMA)

On the week, Nasdaqwas the winner...

And off the Bullard lows...

Only Trannies and Russell 2000 are green for October though...

 

And here is the last 24 hours...

 

VIX dropped from 21.99 last friday to just above 16 - but notably decoupled

 

So looks like longs are hedging into the ramps and the rally is short covering as "most shorted" stocks have the best 2 weeks in 15 months...

HY Credit's best week in 15 months...

Treasuries were unchanged today but ended the week 8-9bps higher in yield...

The USD rose for the first week in 3 led by JPY and EUR weakness

 

JPY carry decoupled from stocks...

 

VIX decoupled (but was punched lower to ensure S&P success above its 100DMA)

USD strength weighed on commodities as gold and silver mirrored its move. Oil slipped further ending just above $81 and copper rallied after China PMI data...

Charts: Bloomberg

Bonus Chart: Thank the lord for QE3...








The Chart That All "Above Average Intelligence Traders" Ignored Today

Ebola seems like a lame excuse, frankly, but it’s a widespread one. Assuming that everyone in the market has above-average intelligence we don’t think they’ll trade Ebola headlines any more than they traded Greece election headlines a while back,” CRT strategist David Ader writes.

 

3 Things to consider...

1) This Chart...

 

2) It's not about being smart

"It is not a case of choosing those [faces] that, to the best of one's judgment, are really the prettiest, nor even those that average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be."

 

(Keynes, General Theory of Employment Interest and Money, 1936).

and

3) How do you measure the IQ of a vacuum tube?


*  *  *

Of course this all makes perfect sense until we get the next Ebola headline...








Why The Market Kept Breaking Yesterday

When markets broke on Wednesday, XIV soared, stocks followed and the volumeless levitation was praised by all as evidence that the world was once again fixed. Yesterday we also saw NYSE Euronext 'break' into the European melt-up close, and later that day, as Ebola headlines hit, the market once again broke numerous times with various exchanges declaring self-help against one another as stocks tumbled on heavy volume. If you are wondering how it is that "the great stock markets in the world" can break so often (and be so ignored by financial media), Nanex exposes the act... as massive quote spamming yesterday sent OPRA to full capacity (broke the efficient flow of data in markets) 13 times...

As Nanex's Eric Hunsader explains each peak over 10 milloin quotes per second - ocurring after a sale of 1025 S&P 500 e-mini contracts - temporarily maxed capacity at OPRA and broke markets... (and a 15 point insta-plunge occurred)

 

 

and here are the major stocks reacting to the order floods...

 

Source: Nanex @NanexLLC

*  *  *

And here is why ISE broke yesterday - Rule 720A

In other words, someone/thing was sending enough fake orders that ISE invoked Rule 720A and shut the system down.








Institutional Fish: "It's All Just A Pretend Game"

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,


Jack Delano. Cars being precooled at the ice plant, San Bernardino, CA Mar 1943

Large and/or institutional investors, your pension funds, your market funds, you name them, have one glaringly obvious and immense Achilles heel that they very much prefer not to talk about. That is, they MUST invest their funds, in something, anything, they can’t NOT invest. They are trapped in the game. They have to roll over debt, investments, all the time.

In today’s markets, they can move into Treasuries, as we see bond funds (and undoubtedly others) do recently, and while that’s already a sign of unrest in the ranks, at the same time it exposes the funds. And not only because everyone knows it won’t allow them to meet the targets they must meet. Oil, gas and gold are unattractive alternatives.

The big funds can play the game, but they really shouldn’t, because they can’t win. Not in the end. Not when the chips are down. The reason is that they cannot fold. And the others at the table know this, and immediately recognize this for the fatal flaw it is. No matter how smart and sophisticated institutional investors and their fund managers may be, in ultimo they are, to put it in poker terms, the ‘designated’ fish.

It may take a long time before this plays out, and they realize it for what it is (fish don’t recognize themselves for what they are, other than, and even that’s a maybe, once they’ve been exposed as such by others), since in times of plenty there is no urgent need for the other players to catch and filet the fish.

As long as there’s enough to eat at the table, the ‘solid’ players can bide their time and let the fish fatten themselves (as long as it’s not from their money), only to gut them when times get leaner. In a way, the solid players use the fish as a way to stow away for a rainy day some of the ultra cheap QE money has made available, the money without which there would be no markets left, if only so their own actions don’t become too conspicuous.

Funds that invest for a living, and whose managers must meet, say, a 7-8% profit target, can appear to be well run and profitable for many years, provided they operate in a rich environment and no solid players decide to go after them (if these do, it’s game over in a heartbeat).

Seven years of QE et al have made this possible. As have many years of increasing debt and leverage and ever looser rules in global finance (re: the infamous murder of Glass-Steagall) before that. But. But that play is coming to a close. The ‘free’ money that’s been arriving at the table from outside sources for so many years is finally, thankfully, starting to dry up (and no, Mario Draghi won’t fill in the gaps).

I’ll quote out of context something then-poker playing law student and now-bankruptcy lawyer Ashvin Pandurangi wrote here at the Automatic Earth on February 9 2011. Out of context in the sense that Ashvin when he spoke of ‘fish’ meant speculators and the like, not institutional investors.

However, because of the fatal flaw for any player of having to play no matter what, the description of the psychology of fish versus solid players at the poker table is still spot on.

A Glimpse Into the Stubborn Psychology of Fish

What makes poker a profitable venture for “solid” players, unlike blackjack, craps or roulette, is their opportunity to capitalize on the mental mistakes of other players, by accurately “reading” the opponent’s potential range of hole cards in any given hand (mostly from betting tendencies and style of play), and accurately calculating the “pot odds” they are being laid (money that must be put in on the present and future betting rounds as a percentage of money that could be won from the pot). The pot odds calculation allows the solid player to determine the best course of action (bet, call, raise, fold) by comparing it to the equity his/her hand carries against the opponent’s range.[..]

Institutional investors such as your pension fund may not suffer from too many ‘mental mistakes’, they may be as smart as other players, but in their place comes the worse flaw of not being able to fold. Which means the the other players have a very easy time of calculating the “pot odds” they are being laid. They just, until today, haven’t been forced to call the hands of the fish, because of the money being injected from outside.

The best feature of a true fish is that they never learn or adapt to an opponent’s style of play. They will keep calling you with weak hands even when you only show down “monsters” at the table, because they are only concerned with their own cards and they always assume you are holding even weaker than they are.

 

There are not many real-life players who fit exactly into this idealized style of play, but there are many who generally harbor its underlying psychology – one of permanent and irrational belief in an ability to win a hand, despite any mounting evidence to the contrary. They cannot possibly conceive of folding, because that means giving up any chance of winning, slim as it may be, and also giving up any money already invested in the pot.[..]

Your pension fund manager may not believe in his ability to win a hand, but still be forced to play it. Because (s)he must always play something, some hand. (S)he is forced into the psychology of the fish.

The fish never stop to think what your strong bets out of position imply about your hand, especially given the fact that you most likely know that they are fish. If the fish do stop to think about these factors, then they most likely dismiss the thought before it has any chance to settle, since it would be too disruptive to their goal of never folding a potential winner. While the solid players are constantly engaged in several different layers of critical psychoanalysis, the fish are forever stuck in a one-track mindset.

It’s sort to fun to play around with, and take out of context, what Ashvin wrote, and what mindsets managers at pension- and other funds may have, not just fun for me but even far more for the solid players sitting opposite those managers. Because they know they have a rich source of profits waiting from them after QE has been cancelled, in the vaults of those whose job descriptions say they must play every day no matter what hand they’re dealt.

In essence it’s all just a pretend game, and the fish in today’s investment world are probably far more aware of their own identity than the fish at a real life poker table. But it doesn’t matter. They’re still fish, and everybody knows they’re going down. And therefore so are your pensions and your other institutional investments. What are they going to do, stop playing? They can’t.

So who are the solid players in this game, you ask? Why, Wall Street, of course. They’ve had their eye on your remaining cash all along.








Shots Fired At High School North Of Seattle; 6 Reportedly Injured, Possible 2 Fatal

There is a large police presence at Marysville-Pilchuk High School  (Marysville, WA). School officials said there is an emergency situation at the school and the building is locked down. Three students and a teacher reported hearing gunshots. Airlift Northwest confirms that they are transporting two patients, but didn't give more information.

"Our son just called to let us know that his kids are ok - his son was about 50 feet from the shooter - a student that he knows.  Our grandson and his friends ran away - jumped a fence and went to a home in the area.  He didn't know about any victims but thought there was at least one," said Tom Hopper, who emailed KIRO 7.

Marysville High School Shooting: Initial reports say six injured, two of those possibly code black

— Breaking Skagit (@BreakingSkagit) October 24, 2014

BREAKING: Fire Dept. says possibly 6 victims in shooting at Marysville-Pilchuck HS. Shooter is in custody, per @DavidRoseQ13FOX . #Q13FOX

— Bill Wixey (@BillWixey) October 24, 2014

As KIRO TV reports,

Casey Blakley and his daughter were driving by the school when they say the huge police response.

 

“About every 30 seconds school I had to pull over because there were so many cops and paramedics going by,” he said. “The road was blocked off from about two blocks away

 

“There were a bunch of kids on the next block that apparently fled the school. They were all huddled together talking to cars that drove by.”

Live Feed (via KOMO News) - click image for live feed

 

Location of High School:

 

The Marysville School District released the following statement:

"The Marysville Pilchuck High School is currently in lock down due to an emergency situation. Police and emergency services have responded. The Marysville School District lock down procedures will remain in effect at Marysville Pilchuck until further notice from law enforcement. We will continue to forward communication in cooperation with law enforcement."

School Campus map:








Caption Contest: "No Tongues" Edition

To 'prove' everything is fine, President Obama met with and hugged Ebola-survivor Nina Pham today... The White House confirms no bodily fluids were exchanged during the meeting...

  • *EARNEST SAYS OBAMA SAW NO RISK HUGGING NURSE CURED OF EBOLA

"No Tongues!"








Chart Of The Day: Jeff Bezos "Value Creation" Edition

Yesterday, we summarized all that was wrong in Amazon's worst quarter in history where apparently one can no longer "make up for negative profits with volume."

Here is another way of deconstructing Amazon's love-hate relationship with profitability: in all of its 20+ year history, Amazon has generated under $2 billion in Net Income. The offset? Jeff Bezos' net worth, which according to Bloomberg is about $30 billion (that was the number in April, when Bezos had lost a whopping $6.5 billion due to the collapse of AMZN, by now the number is surely far lower making Bezos the biggest billionaire loser in 2014). Still, for indicative purposes, the data is good enough.

In short: this is what Jeff Bezos' value creation looks like (one does wonders if Amazon has purposefully been a perennial "bottom-line loser" for decades simply to avoid paying taxes).

 

And as a bonus chart, this from the WSJ:

Inspired by @ReutersJamie








Pages