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Seven Consecutive Downward Reivisions To New Home Sales Data Place Serious Doubts On Report Accuracy

You will pardon us if we don't "buy" the latest attempt by the Census Department to telegraph housing euphoria with the just reported number of 481K new December home sales, a surge of 11.6% compared to November, an increase which was expected by the consensus to be only  2.7%. In fact, the 481K print is now the "highest" since June of 2008.


The reason for our disbelief? Because as we have been tracking for the past 6, and now 7 months, every single such euphoric print since May of 2014 has been revised substantially lower after the fact (and after the headline-scanning algos promptly gobbled up stocks on the initial "beat"), and sure enough, the November print of 438K, was also just "revised" downward to 431K.

Putting today's "highest in 7 years" new home sales print in context: consider that in May 2014 the same data series was originally reported at 504K... only to be revised to 458K!

In other words, there has now been 7 consecutive downward revision to the New Home Sales data!

As we said: forgive us, but we will once again refrain from drinking the Department of Truth's cool aid.

Consumer Confidence Surges To Highest Since The Last Time Markets Crashed

Despite stagnant wages, surging jobless claims, and global geopolitical anxiety, US consumers have not been this exuberant since August 2007... a month before the great quant fund blow-up and the top of US equities... But it's different this time, we're got money-printing and low oil prices... right? Texas confidence plunged from 119.4 to 111.9 (led by a huige crash in expectations from 95.8 to 83.5). Finally, expectations for higher incomes in the next 6 months surged higher - almost at record levels of hope - despite the slump in hourly average earnings.


Highest since Aug 2007


The last time Consumers were this confident marked the top in US equities and the imminent crash of the quant funds...


And finally the hope for higher income remains its stringest almost ever... in the face of an ugly reality...


Charts: Bloomberg

US Services PMI Improves But New Orders Drop To Post-Recession Low

Just when you hoped the bad news was bad enough to warrant an uber-dovish Fed statement, Markit's US Services PMI prints 54.0, beating estimates of 53.8 and up from December's 53.0. After 6 months of dropping, January's preliminary data rose; however, as Markit notes, new business expansion fell to a post-recession low, “The 5.0% an nualised rate of GDP expansion in the third quarter certainly looks like a peaking in the pace of expansion, with the surveys pointing to 2.5% annualised growth at the start of the year."



As Markit concludes,

“The January manufacturing and services surveys collectively recorded the weakest monthly increase in new orders since the recession, sending a major warning light flashing that growth of demand has continued to slow at the start of the year.


“The 5.0% an nualised rate of GDP expansion in the third quarter certainly looks like a peaking in the pace of expansion, with the surveys pointing to 2.5% annualised growth at the start of the year.


“Input costs meanwhile showed no increase for the first time since 2 009, highlighting how lower oil prices are feeding through to the economy and should drive inflation down further in coming months.


“The surveys therefore send a dovish signal for interest rates, and if official data such as Friday’s GDP report sends similar signs of the economy cooling, expectations of the first rate hikes are likely to get pushed back into late 2015 and even, as we have seen in the UK recently, early 2016

*  *  *

China Leading Index Plunges To 6 Year Lows

Just released this morning, following last night's plunge in industrial profits, China's Leading Index continued its freefall to its lowest level since Jan 2009...



Charts: Bloomberg

"Prospects For A Home Run In 2015 Aren’t Good" - November Case-Shiller Confirms Ongoing Housing Market Slowdown

In a day of furious disappointments, the Case-Shiller housing report, albeit looking at the ancient economic picture as of November, confirmed what most had known: that the growth in housing prices slowed down yet again on not only a Year over Year basis, which rose just 4.31%, the lowest annual increase since October 2012...

... but also dropped by -0.22% decline on a monthly basis, which may not sound like much, but was the worst monthly drop since February 2012!


The breakdown by city:


And from the report:

Home Price Gains Continue to Slow According to the S&P/Case-Shiller Home Price Indices




Both the 10-City and 20-City Composites saw year-over-year growth rates decline in November compared to October. The 10-City Composite gained 4.2% year-over-year, down from 4.4% in October. The 20-City Composite gained 4.3% year-over-year, compared to 4.5% in October. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.7% annual gain in November 2014 versus 4.6% in October 2014.


Miami and San Francisco continue to lead all cities, posting gains of 8.6% and 8.9% over the last 12 months. Nine cities, including Tampa, Atlanta, Charlotte, and Portland, saw annual growth rates climb more than other cities in November. 12-month growth rates for Detroit and Miami dropped the most among all 20 cities.




The National and Composite Indices were both marginally negative in November. The 10 and 20-City Composites reported declines of -0.3% and -0.2%, while the National Index posted a decline of -0.1% for the month. Tampa led all cities in November with an increase of 0.8%. Chicago and Detroit offset those gains by reporting decreases of -1.1% and -0.9% respectively.

The conclusion:

“With the spring home buying season, and spring training, still a month or two away, the housing recovery is barely on first base,” says David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Prospects for a home run in 2015 aren’t good. Strong price gains are limited to California, Florida, the Pacific Northwest, Denver, and Dallas. Most of the rest of the country is lagging the national index gains. Moreover, these price patterns have been in place since last spring. Existing home sales were lower in 2014 than 2013, confirming these trends.


Difficulties facing the housing recovery include continued low inventory levels and stiff mortgage qualification standards. Distressed sales and investor purchases for buy-to-rent declined somewhat in the fourth quarter. The best hope for housing is the rest of the economy where the news is better. 2014 was a good year for job creation and weekly unemployment claims – good short term indicators – which continue to provide upbeat reports. Consumer confidence, helped by cheap gasoline prices, is strong, and a good GDP number is expected this week.”

4th housing dead cat bounce: over.


Preview of January FOMC Meeting and Beyond

The Federal Reserve’s two-day meeting concludes Wednesday.  To the extent the FOMC meeting is ever routine, this should be it.  Its forward guidance evolved at the end of last year.  The “considerable time” between the end of the asset purchase program, which it never called quantitative easing, and the first hike has been replaced with “patience”.  


At Yellen’s first press conference last year, she abandoned the Fed’s purposeful, strategic ambiguity and suggested “considerable time” was around six months.  She again yielded to temptation in December to define “patience” as a couple of meetings.  


The January meeting is covered by that forward guidance.  It is unlikely to change.  The next meeting in March is a different story.  If the Fed wants to prepare the market for a potential rate hike in the middle of the year, the March meeting, which will see updated macro-economic forecasts and a press conference, is more important.  Patience at the March meeting would seem to preclude a June hike. 


Economic activity has unfolded largely as the Federal Reserve anticipated.  Its macro-economic assessment is unlikely to have changed dramatically over the past six week.  There was an unusual large number of dissents at the December meeting.  Not only have those regional presidents surrendered their votes on the FOMC amid the annual rotation, but all three have indicated plans to resign this year. 


The decline in yields at the short-end of the curve, including the Fed funds and Eurodollar futures, suggest that the consensus expected a June hike may be fraying.  There are three reasons for the creeping doubts, and they are related to each of the Fed’s three mandates:  price stability, full employment, and financial stability. 


At heart of the matter are developments in Europe.  The decline dramatic decline in the euro and European interest rates is spurring a strong dollar rally.  The dollar’s appreciation will, the argument maintains, will undermine US exports and growth, slowing progress in the labor market.    The dollar’s rally will further depress prices.  The Fed’s preferred measure of inflation has been below target for nearly three years.  The flow of capital out of Europe may endanger US financial stability.


While the economic theory behind these concerns is valid, in practice a more nuanced picture emerges.  And one that may not pose a significant hurdle to a mid-year hike.  The US is the world’s third largest exporter (behind China and Germany), but that is not the primary way US companies service world demand.  For historical and institutional reasons beyond the scope of this short note, US companies service foreign demand primarily by building and selling locally.  The sales by majority owned affiliates of US multinationals abroad will see 4-5x more goods and services than the US exports.  That means that local production takes a larger hit when local demand is weak rather than US-based facilities. 


The US exports about 13% of GDP.  This is relatively low among the high income countries though we should note that Japan, which is often mistakenly said to be export driven, exports about the same as the US as a percentage of GDP.   US exports are near record levels.  The best thing for US exports, if that is one’s focus, is stronger world demand, not necessarily a weaker dollar. 


US officials recognize that Europe and Japan are taking measures that can help to facilitate stronger growth. Through various administrations, the pro-growth stance of the US officials has remained a relative constant.  It is not, of course, that growth solves all the problems, but it does make the problems easier to address.   While the euro area stagnated in the April-September 2014 period, and the Japanese economy contracted, the US experienced its strongest growth in over a decade.  The US economy is expected to have continued to growth above trend in Q4.  That data will be reported at the end of the week. 


Headline inflation in the US is set to fall further under the weight of the decline in energy prices.   A negative year-over-year print cannot ruled out.  The Federal Reserve differs from most other major central banks by targeting what is called core inflation in the US, which excludes food and energy.  Fed officials are well aware that households pay for food and energy.  The reason to exclude them for policy purposes is that they are volatile.  They can obscure the underlying signal. 


For the past half century, headline inflation has converged with core inflation; not the other way around.   The Fed’s leadership has signaled that it would look through the one-off decline in inflation sparked by the fall in energy prices.  The stimulative impact on demand is regarded as more permanent, provided energy prices stay low. 


There may be some bleed through as the drop in energy has some modest knock-on effects on the core rate.  Transportation costs may decline though it is not yet apparent in airfare.  Public transportation costs are administered prices and are unlikely to be cut.  A ride on the New York subway, for example, is about to rise by 10%.  Around 40% of the core basket is accounted for by housing costs, and these do not appear poised to decline. 


The dollar’s appreciation can be expected to exert downward pressure on import prices.  However, much of what the US imports are priced and invoiced in US dollars.  This is an import mitigating factor that is often not appreciated by observers. 


The last time the Fed began a tightening cycle, the core PCE deflator, the Fed targeted rate, was not far from current levels.  Back then, in 2004, the Fed did not have a formal inflation target, but it is instructive nonetheless.   The same is generally true about the unemployment rate.  By mid-year, the national unemployment rate is likely to have fallen further.  In addition, a strong majority of states will also have unemployment levels that economists regard as full employment. 


It is true that the participation rate has fallen.  It appears that retirement and returning to school are two major contributing factors.  There has also been an unusual increase in workers on disability insurance. 


The point is that the Federal Reserve is already showing patience.  The current macro-economic performance in past cycles would have arguably already seen the Fed begin a tightening cycle.   Indeed, part of the dollar’s appreciation is predicated on anticipation of Fed tightening. 


Some observers suggest that the flow of European savings into the US may jeopardize the Fed’s third (and often forgotten) mandate financial stability.  However, they mistakenly think this could deter Fed tightening.  To the contrary, concern about financial stability has been cited by the hawks on the Federal Reserve to hike rates rather than the doves who are concerned about the low levels of inflation. 


There are two other reasons what a June rate hike should not be abandoned yet.  First, the tapering was indicative of the process the Fed is pursuing.  It gave investors, businesses and foreign countries several months of advanced warning that it would slow its asset purchases in a measured manner.  It did precisely that.  Neither the contraction in Q1 14 GDP nor the acceleration of job growth took it off its course.  The leadership of the Federal Reserve has indicated that it is getting closer to its first hike.  The evolution of the macro-economic data will determine the exact timing, but near midyear, that have said, still look reasonable.    The Fed’s transparency and credibility rests on it saying what it will do and then doing it. 


Second, it is not clear when the next economic downturn will begin though we can feel fairly confident that it will not be this year.  The Federal Reserve needs to create the conditions to allow it to cut rates rather than resort to new asset purchases.  In order to do this it needs to raise rates.   This can be parodied as saying rates have to be raised so they can be cut, but it does not do this argument justice. 


The bottom line is that the January FOMC meeting will most likely pass without much impact.  Clearer indication of the Fed’s intention in Q2 will have to wait for the March meeting.   While some are observers are having cold feet, we continue to think that a June hike remains the most likely scenario.  If we are wrong, it is that the hike is delivered in September instead.  Regardless of the exact timing, the US economy and the Federal Reserve are well ahead of most of the major central banks in the larger business cycle.  


NYSE Invokes Rule 48 To Pre-Empt Selling Panic

The status quo must be maintained...


And what better excuse to stall the opening plunge implied by futures than the "blizzard" which never was... The last time this was invoked was June 2012 (amid a dramatic drop in pre-open futures) and Sept 2011 amid the chaotic 400-point swings in The Dow. Funny they do not use this "Rule" when futures indicate massive upside opens?



Rule 48. Exemptive Relief — Extreme Market Volatility Condition

(a) In the event that extremely high market volatility is likely to have a Floor-wide impact on the ability of DMMs to arrange for the fair and orderly opening, reopening following a market-wide halt of trading at the Exchange, or closing of trading at the Exchange and that absent relief, the operation of the Exchange is likely to be impaired, a qualified Exchange officer may declare an extreme market volatility condition with respect to trading on or through the facilities of the Exchange.

(b) In the event that an extreme market volatility condition is declared with respect to trading on or through the facilities of the Exchange, a qualified Exchange officer shall be empowered to temporarily suspend at the opening of trading or reopening of trading following a market-wide trading halt: (i) the need for prior Floor Official or prior NYSE Floor operations approval to open or reopen a security at the Exchange (Rules 123D(1) and 79A.30); and/or (ii) applicable requirements to make pre-opening indications in a security (Rules 15 and 123D(1)).

(c) A suspension under section (b) of this Rule is subject to the following provisions:

(1) (A) Before declaring an extreme market volatility condition, the qualified Exchange officer shall consider the facts and circumstances that are likely to have Floor-wide impact for a particular trading session, including volatility in the previous day's trading session, trading in foreign markets before the open, substantial activity in the futures market before the open, the volume of pre-opening indications of interest, evidence of pre-opening significant order imbalances across the market, government announcements, news and corporate events, and such other market conditions that could impact Floor-wide trading conditions.

(B) Such review shall be undertaken in consultation with relevant officers of NYSE Market and NYSE Regulation, as appropriate. Following the review, the qualified Exchange officer or his or her designee shall document the basis for declaring an extreme market volatility condition.

(2) The qualified Exchange officer will, as promptly as practicable in the circumstances, inform the Securities and Exchange Commission staff that an extreme market volatility condition has been declared, the basis for such declaration, and what relief has been granted.

(3) An extreme market volatility condition may only be declared before the scheduled opening or reopening following a market-wide halt of securities at the Exchange.

(4) A declaration of an extreme market volatility condition shall be in effect only for the particular opening or reopening for the trading session on the particular day that the extreme market volatility condition is determined to exist. The Exchange may declare a separate extreme market volatility condition on subsequent days subject to sections (b)(1) through (b)(3) above.

(5) A declaration of extreme market volatility shall not relieve DMMs from the obligation to make pre-opening indications in situations where the opening of a security is delayed for reasons unrelated to the extreme market volatility condition.

(d) For purposes of this Rule, a "qualified Exchange officer" means the Chief Executive Officer of ICE, or his or her designee, or the Chief Executive Officer of NYSE Regulation, Inc., or his or her designee.

*  *  *

As WSJ explains, basically it means the designated market makers “will not have to disseminate price indications before the bell, making it easier and faster to open stocks.

The rule was approved by the Securities and Exchange Commission on Dec. 6, 2007 and has been used rarely since then.

The Mystery Deepens: Dutch Central Bank Denies Reports It Bought Gold For The First Time In 17 Years

Overnight, there was much commotion in the precious metal space when, out of the blue, the IMF reported that months after announcing it had unexpectedly repatriated over 120 tons of gold from the NY Fed, the Netherlands had also purchased some 10 tons of gold in the open market, taking its total to 622 metric tons, the highest since 2007, a period in which it had been unchanged for 8 years.

This was promptly reported by both Reuters:

Netherlands added to its gold reserves for the first time in 16 years. It bought nearly 10 tonnes in Dec to bring total to 622 tonnes

— Anantha (@AnanthalakshmiA) January 27, 2015

And Bloomberg:

The Netherlands added to its gold reserves for the first time since 1998 as the ninth-biggest holder boosted assets to the highest in seven years, while Russia bought for a ninth month, International Monetary Fund data show.


Bullion reserves in the Netherlands climbed to 20 million ounces or 622 metric tons in December, the highest since 2007, after being unchanged at 19.7 million ounces from December 2008 through November, the IMF’s website showed. Russia, with the fifth-biggest hoard, held 38.8 million ounces last month, the most in at least two decades, the data show.


“Central-bank purchases may have lent some support to gold prices in the past, but it is likely short-lived,” said Barnabas Gan, an economist at OCBC in Singapore. “The most important point for gold is that speculative demand will likely stay tepid in 2015 given that a firmer dollar, higher interest-rate environment and a rosier U.S. economy will depress safe-haven demand,” he said by e-mail.

After today's absolutely abysmal micro and macro-economic data, one can debate just how "firmer" the dollar will remain, but at least on the surface, the Dutch action made sense: after all there is nothing wrong with scrambling to not only repatriate your own gold, hinting lack of trust in the most important central bank of all, the NY Fed, but also buying gold in the open amrket, hinting lack of trust in all central banks around the globe.


Moments ago Bloomberg blasted something even more unexpected. Namely that the "Dutch Central Bank Says It Did Not Increase Gold Holdings"


It adds that Reports based on IMF figures showing that the Dutch central bank increased its gold holdings are incorrect, accord. to an e-mailed statement.


Gold reserves were unchanged at 19.691m troy ounces as of Dec. 2014, central bank said


"This is the same information that the Dutch central bank reports to the IMF on a monthly basis,” accord. to statement

And from the official press release:

De Nederlandsche Bank (DNB) has not increased its gold holdings. Several media reported this Tuesday that based on IMF figures, DNB’s gold stock increased in December 2014. This is incorrect.


DNB’s correct and current gold holdings can be verified at The table shows that in December 2014, DNB’s gold stock consisted of 19.691 million fine troy ounces and remained unchanged compared to all preceding months.


This is the same information that DNB reports to the IMF on a monthly basis.

Which brings up an interesting mystery with three possible options:

  • i) did the Dutch central bank inadvertently disclose what its true gold holdings were to the IMF without meaning to do so? This certainly is likely considering the secrecy with which the central bank had been repatriating its gold.
  • ii) is the IMF on purpose misrepresenting the Dutch gold holdings to generate a buying "panic", because while it is explainable for Russia to hoard gold, it certainly does not send a good message if one of the most respected "developed nation" central banks is splintering from its peers and shifting reserves from fiat to precious metals.
  • iii) this was an honest fat finger mistake and the intern who plugged in the same number for the past 7 years, and whose finger "slipped", has now been fired.

Keep an eye on Dutch gold and its central bank, because none of these "explanations" make much sense, and considering the strange developments in the gold space in the past 6 months, there is surely more here than meets the eye.

"Shadow Of The Crisis Has Not Passed": Durables Goods Orders Collapse

Following November's across the board ugliness in Durable Goods data, the hockey-stick extrapolators all positioned for the bounce back... Only 1 of 57 economists expected a negative print! But the actual data was a total disaster. Against expectations of a 0.3% rise (following last month's 0.7% drop), December printed down 3.4% and November was revised drasticaly lower to down 2.1%. This is the lowest durable goods ex-transports since March.

The breakdown:

  • Durables: -3.4%, Exp. +0.3%, Last revised from -0.7% to -2.1%
  • Durables ex transports: -0.8%, Exp. +0.6%, Last revised from -0.4% to -1.3%
  • Core Cap Goods Orders: -0.6, Exp. 0.9%, Last revised from 0.0% to -0.6%
  • Core Cap Goods Shipments: -0.2%, Exp. 1.0%, Last revised from 0.2% to -0.5%

And the ugliness in charts:


and Uglier.


And ugliest: on a Y/Y basis, November durable goods were revised to negative - usually a harbinger of a recession.

Charts: Bloomberg

Get Ready For (Fraudulent) Higher U.S. Interest Rates



Jeff Nielson for Sprott Money



The U.S. government is already bankrupt. This is old news to anyone who has been following the number-crunching of individuals such as former Reagan economic advisor, Professor Lawrence Kotlikoff. The U.S. government, the greatest debtor in the history of the world, claims that it is about to (finally) raise interest rates, which have been permanently/fraudulently frozen at 0% for now over 6 years.

So, what happens when an already-bankrupt debtor chooses to pay higher interest rates on that debt? Ka-boom! But not in the Wonderland Matrix. In this fantasy-realm of nonsensical, economic mythology, literally anything is possible – including the impossible.



Beginning in 2009; the Federal Reserve began a policy of openly and publically pumping-up U.S. financial markets and U.S. equity markets with the most-extreme explosion of money-printing ever seen since the creation of the U.S. dollar, evidenced by a chart which regular readers have seen ad nauseum.



As has been noted in many previous commentaries; mathematics tells us that the ultra-extreme economic function expressed by this insane chart can only end in two ways (as always happens with such extreme, exponential curves): explosion or implosion.



“Explosion” (in this context) simply means hyperinflation, the U.S. dollar beginning a hyperinflation spiral, and then quickly plunging to zero. This is what we would have already seen, if the One Bank was not manipulating all of these (paper) currencies, all of the time. Fundamentally; the U.S. dollar is already completely worthless, based upon three, different, fundamental metrics.



But there is a second way in which the exponential money-printing of the Federal Reserve could end: in implosion. Obviously if explosion would/must occur from continuing the money-printing at that extreme/insane rate, then implosion would/must occur from the opposite: any attempt to reduce that money-printing.



We saw this, in 2013. For six months, professional liar B.S. Bernanke stood in front of a microphone every day promising that “tapering” was coming soon, just as this Boy Who Cried Wolf had been promising his “exit strategy” for the 5 years of lying which preceded that.



What happened? In simply talking about tapering; interest rates on U.S. government debt doubled, costing the crippled U.S. economy $100’s of billions in higher interest payments alone. This caused Bernanke to do a complete about-face in September of 2013, and (shamelessly) back-track on his promise: there would be no “tapering”.



But flash ahead to the end of 2014, and what are we told has happened? The lying puppet who replaced Bernanke, Janet Yellen, claims to have finished “tapering” all of the “QE” money-printing. She claims to have finished what B.S. Bernanke (and the chart above) insist is impossible to even begin: reducing the money-printing.



Of course in the real world; there has been no “tapering” of any kind. Every dollar of “QE” which was supposedly eliminated has been replaced by simple counterfeiting: creating new “U.S. dollars”, but not acknowledging the creation of these new $TRILLIONS.



This is also an old game for the Fed, which has been mass-counterfeiting U.S. currency since (at least) as early as 2009. This was when the U.S. Treasury Department turned the U.S. “Treasuries market” into (literally) a “blackmarket” where it is no longer possible to see precisely who is “buying” all of these worthless bonds – at the highest prices in history.



Obviously any form of “money” (including counterfeit money) can be used in a blackmarket. As explained in several previous commentaries, this is the only, possible explanation as to how the U.S. has delayed formal debt-default. In 2009; the supply of U.S. new debt tripled, while (thanks to the Crash of ’08) all the former “buyers” (i.e. demand) for that debt dried-up. Triple the supply, and no demand = debt-default.



But there was no debt-default for the U.S. In fact, despite having no visible buyers for its debt, and already being fundamentally bankrupt; interest rates on U.S. debt plunged dramatically – as the U.S. government insisted (and continues to exist) that there are buyers “lining up” to soak-up these endless $trillions of debt. It’s not possible, unless we assume that these “buyers” are using counterfeit money, supplied by the Fed itself.



How else could tiny Belgium (supposedly) “buy” over $140 billion of Treasuries in just three months, an amount equal to 30% of its national GDP? What we are supposed to believe is that for three months, the government of Belgium was “buying” U.S. debt (for absolutely no reason, whatsoever) at a rate greater than the entire output of is economy. Obviously no sane (or honest) government would devote more than 100% of the entire economic output of their economy to soaking-up worthless U.S. bonds – even for ‘only’ a three-month period.

What we saw, what was officially reported by the U.S. government was impossible…unless Belgium’s government was secretly provided with a large stack of funny-money, to fund all that bond-buying. It is in such a world of black markets and shameless/blatant frauds that we now hear all of the outlets of the Corporate media proclaiming that higher U.S. interest rates are on the way.



Simply do an internet search of the phrase “Federal Reserve about to raise interest rates”, and one will see all of the parrots of this propaganda machine squawking in unison. It’s not possible for this bankrupt government to raise interest rates, but (as with “tapering”) the Zombies are told – unequivocally – that the impossible is about to occur, again.



So given that the U.S. government can’t raise interest rates (but is ready/willing/able to perpetrate any form of financial fraud imaginable); what will actually be happening when the U.S. government pretends to raise its official interest rate, and thus the rate-of-interest it supposedly pays on (now) an $18 TRILLION mountain-of-debt?



What will happen is what happens every time anything changes in “the New Normal”. Life will get much worse for everyone, everyone except the Crime Syndicate which rules us, and the Fat Cats it represents. Everyone except the U.S. government will pay higher interest on their debts, once the U.S. government pretends to raise its own interest rate.



Because the Fat Cats at the top have been illegitimately enriched at the fastest rate in history over (in particular) the past 20 years; they have no debts. They are all debt-collectors, thus higher interest rates only make the Fat fatter.



For everyone else; it will be higher interest on their mortgages, higher interest on their credit cards, higher interest on their student loans, etc., etc., etc. But not the U.S. government. It will simply pay whatever it can afford to its own Debt-Collector, the One Bank.



But wait, interrupt skeptics, governments much account for monies coming in and going out. Not the U.S. government. Not in the Wonderland Matrix. It simply makes up numbers, and calls the collection of lies “the U.S. budget”. It is the U.S. government itself which has proven the level of fraud here.



Back when the United States still paid lip-service to the Rule of Law; the Treasury Department was legally required to do a once-a-year calculation of the real U.S. “deficit” (using GAAP accounting), as compared with the fiction: the “official deficit” announced (and supposedly calculated) in the annual Budget.



In the years of the Bush regime; the “official deficit” represented as little as 5% of the actual increase in indebtedness. It is not possible to “massage” numbers in order to reduce a calculation by 95%. One can only engage in such egregious lying through large/clumsy frauds, or out-and-out fabrications.



Not only could “the U.S. budget” not pass the scrutiny of any (honest) auditor, it couldn’t meet the scrutiny of the auditor’s pet monkey. It is nothing but an exercise in low-grade fiction writing. In such an absurdly falsified document, “pretending” to pay higher interest rates on its debts would merely be one of many gigantic frauds.



Get ready for “higher U.S. interest rates”, for all American readers, and very likely all readers, as this faux-increase in interest rates will likely ripple through the entire Western economic system. While the “increase” in rates will be purely illusory for the corrupt, puppet-government of the U.S.; it will be all too-real for all of us Little People.



When these higher rates have spread throughout our economies, don’t expect the U.S. government to report “higher deficits”. It will either report no change in its rate-of-increase in its indebtedness, or even a decrease in its “official deficits”.



In the Wonderland Matrix, not only is the “impossible” possible, it is a fait accompli. The propaganda machine (or the government itself) need merely “announce” something, and then (we’re told) it always happens, just as promised.



It happened when the U.S. government claimed to be able to “sell” three times as much debt, even though there were no buyers. It happened when the U.S. government claimed to “taper” its hyperinflationary money-printing, while the most-extreme bubbles in U.S. equity markets in 85 years not only survived, they continue to bubble higher.



We call it the Wonderland Matrix. The propaganda machine calls it “the New Normal”. The impossible is possible, again and again and again. Life always gets better for those on top. Life always gets worse for everyone else. We can get used to it, or we can become citizens again – and do something about it.


Jeff Nielson for Sprott Money

Dow Futures Plunge 425 Points From Friday Highs; Greek Stocks/Bonds Plunging, Crude $44 Handle

Well that escalated quickly. While this morning's weakness in stocks is being pegged to earnings misses (and rightly so), the selling pressure started as Europe opened and Greek stocks and bonds accelerated their freefall. Greek stocks and bonds are now below ECB QE levels and WTI Crude back at a $44 handle as CAT CEO demands Fed does not raise rates due to the "fragile" US economy... The Dow is now 425 points off Friday's highs...


Dow is now down 240 points from highs...


Having briefly grazed green year-to-date, The Dow has plunged 425 points


As Greek stocks and bonds plunge...

As The Middle Class Evaporates, Global Oligarchs Plan Their Escape Form The Impoverished Pleb Masses

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

The middle class has shrunk consistently over the past half-century. Until 2000, the reason was primarily because more Americans moved up the income ladder. But since then, the reason has shifted: There is a greater share of households on the lower rungs of the economic ladder.


– From yesterday’s New York Times article: Middle Class Shrinks Further as More Fall Out Instead of Climbing Up


At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were already planning their escapes. “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said.


– From the Guardian’s article: As Inequality Soars, the Nervous Super Rich are Already Planning Their Escapes

So the other day, President Barack Obama once again demonstrated his contempt for the American public by using his State of the Union address to pejoratively blurt out meaningless phrases such as “but tonight, we turn the page” and: “The verdict is clear. Middle-class economics works. Expanding opportunity works. And these policies will continue to work, as long as politics don’t get in the way.”

Sorry, but why are “we turning the page” tonight? Weren’t you elected over six years ago? Why didn’t you turn the page in 2009?

Meanwhile, I’m astounded by the phrase “middle-class economics works.” Perhaps it does, but how would anyone know? The only thing I’ve seen from his administration is a laser focused determination to consolidate all American wealth and power into the hands of a tiny group of oligarchs and their lapdogs.

Indeed, the following articles published in the last two days by the New York Times and the Guardian show the true results of Obama’s oligarch-coddling legacy. The Obama years have been nothing short of an oligarch crime scene.

First, from the New York Times:

The middle class that President Obama identified in his State of the Union speech last week as the foundation of the American economy has been shrinking for almost half a century.


In the late 1960s, more than half of the households in the United States were squarely in the middle, earning, in today’s dollars, $35,000 to $100,000 a year. Few people noticed or cared as the size of that group began to fall, because the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets.


But since 2000, the middle-class share of households has continued to narrow, the main reason being that more people have fallen to the bottom. At the same time, fewer of those in this group fit the traditional image of a married couple with children at home, a gap increasingly filled by the elderly.

Remember, middle-class economics works. If the goal is its total destruction.

These charts from the New York Times do not tell the tale of a thriving economy:

Even as the American middle class has shrunk, it has gone through a transformation. The 53 million households that remain in the middle class — about 43 percent of all households — look considerably different from their middle-class predecessors of a previous generation, according to a New York Times analysis of census data.


In recent years, the fastest-growing component of the new middle class has been households headed by people 65 and older. Today’s seniors have better retirement benefits than previous generations. Also, older Americans are increasingly working past traditional retirement age. More than eight million, or 19 percent, were in the labor force in 2013, nearly twice as many as in 2000.


According to a New York Times poll in December, 60 percent of people who call themselves middle class think that if they work hard they will get rich. But the evidence suggests that goal is increasingly out of reach. When middle class people look up, they see the rich getting richer while they spin their wheels.

One of the main reasons we have seen such a low level of resistance to this historic oligarch theft, is due to the successful brainwashing of the American public. Despite clear evidence to the contrary, 60% of what is left of the middle-class still think they are going to get rich. They have no idea that they are really just a bunch of deluded plebs unable to see how systematically and catestrophically they are being played.

Meanwhile, the Guardian describes how many global oligarchs are already planning their escape. These people know full well they are being enriched criminally. Their response is to take as much money as possible and flee before the pitchforks emerge (see: The Pitchforks are Coming…– A Dire Warning from a Member of the 0.01%).

With growing inequality and the civil unrest from Ferguson and the Occupy protests fresh in people’s mind, the world’s super rich are already preparing for the consequences. At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were already planning their escapes. “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said.


But as former New Zealand prime minister and now UN development head Helen Clark explained, rather than being a game changer, recent examples suggest the Ferguson movement may soon be forgotten. “We saw Occupy flare up and then fade like many others like it,” Clark said. “The problem movements like these have is stickability. The challenge is for them to build structures that are ongoing; to sustain these new voices.”


Clarke said: “Solutions are there. What’s been lacking is political will. Politicians do not respond to those who don’t have a voice In the end this is all about redistributing income and power.”


She added: “Seventy five percent of people in developing countries live in places that are less equal than they were in 1990.”

Welcome to the recovery suckers.

Austrian "Freedom" Party Demands Bailout For Swiss Franc Speculators (From "Monstrous Monetary Policy")

The phrases "it's just not fair" and "waa waa waa" were not seen in Austria's Freedom Party's statement demanding a bailout for Swiss-Franc-denominated borrowers (i.e. people who were willing to speculate on FX rates with their house as collateral in order to get a lower interest rate in order to afford a bigger home that they really couldn't afford in real risk-adjusted terms). What Austria needs, general secretary Franz Kickl exclaimed is "a general regulation and an offer to all Franc borrowers," adding that "it cannot be that Austrian borrowers are the only ones who keep their losses even they are indemnified in Hungary, Croatia and perhaps even in Poland, the Czech Republic and Slovakia." Which does sound oddly like 'waa waa waa'?


Austria Freedom Party Statement (via Google Translate):

Kickl: Freedom Party calls for aid package for Franken-borrower

Home builders and entrepreneurs pay bill for catastrophic monetary policy


Vienna (OTS) - The ECB monetary policy always takes monstrous forms. The bill for the absurdities pay the citizens of the economically better prepared States and Austria - especially the savers whose assets are depreciated in real terms, and in particular the extent franc borrowers. "It has to be this clear, there blame for the disaster that has increased by up to 60 percent of the debts of the borrower franc, the Chaos policies of governments in the euro area countries - and in Austria's fault SPÖ and ÖVP and its mehrheitsbeschaffenden green and pink appendage, "said Freedom Party General Secretary NAbg. Herbert Kickl .


Although located franc borrowers had to be the speculative nature of their funding form quite aware, must surely is a legitimate apply to them, explained Kickl: "I do not think that someone who, for example, in 1995 with confidence on economic development in Austria and which resulting hard currency has taken out a loan had to reckon with the fact that 15 years later the prevailing policy begins to demolish the now common European currency intentionally by the break even given all the rules. " Therein lies namely the cause for the dramatic decline in the value of the euro against the Swiss franc and also many other currencies.


Kickl now therefore calls on the policies a comprehensive support package for Franken-borrowers. With life extensions - bring the banks money again - it could not be done. "We should definitely have a look to Eastern Europe to throw," said Kickl. Croatia chic at just the come under pressure borrowers financially bail out. Hungary had already done this, and other Eastern European countries could follow, as experts say. "The cost for wear, especially in Eastern Europe often Austrian banks. It can not be that, although the Hungarians, Croats, perhaps even the Poles, Czechs and Slovaks replace their losses and at the end of the Austrian borrowers are the only ones on the track and sit fully on their losses remain, "said Kickl. Austria had its banks massively helped at the outbreak of the crisis, although the cause was to search for their difficulties never in Austria itself, but especially in Eastern Europe. "Now the opportunity arises - for banks as well as the policy must set appropriate rules - to do something in this financial and economic crisis for its own citizens," Kickl appeals to the government parties, as soon as possible to present a proposal.


The Freedom Party Secretary General also points out that many loans also legally lot was to clarify, because incorrect advice could be available by banks or by the release of stop-loss limits to fatal courses, the damage should be prevented so has widened had been. "It can not be that one, leaving the enormous risk of litigation to enforce these mistakes in the already financially ailing borrowers. We need a general scheme and an offer to all Franken-borrowers," says Kickl. After all, it is also in the interest of the banks, which also reduce existing risk to themselves by foreign currency loans. Now to put your head in the sand and just playing for time, increase the risk of the catastrophic Euro-Politics - Tagged government bond purchases by the ECB - even further.

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Bailouts for all...

The Joyflation Of The Superbowl

2015 looks set to be the 'superbowl-est' Super Bowl of all time as far as ticket prices are concerned. As Forbes reports, next Sunday's game will be the most expensive NFL championship ever based on ticket resale price.

The current average list price for Super Bowl XLIX tickets at University of Phoenix Stadium in Glendale, Ariz., is $6,500, making it the most expensive Super Bowl that TiqIQ has ever tracked. That average is 110% more expensive than it was at the same point one year ago. Last year on the day of the game, the secondary market average was $2,500.

Below is a chart, by day, of the last six Super Bowls and the average price by day for each. As you can see, 2015 has done nothing but move up, and it has yet to peak.  With it’s almost vertical climb in the last two days, this year’s game is literally off the chart – or at least redefining the upper limits of the chart.

Based on historical estimates, $3,000 is a good mark to shoot if you just want to ‘get in’.

2010: Saints vs. Colts: $2,329.26
2011: Packers vs. Steelers: $3,649.41
2012: Giants vs. Patriots: $2,955.56
2013: Ravens vs. 49ers: $2,199.08
2014: Seahawks v Broncos: $2,567.00
2015: Seahawks v Patriots: $3,000.00 (est.)

Read more here...

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Welcome to joyflation America.

Perfect Palo Alto

If for some reason you were to join me in my car, going about my daily errands around Palo Alto, we would in all likelihood pass the intersection of Alma and Charleston, and you might ask me who this guard was at the railroad tracks and why he was there:

"Oh, he's there to make sure high school kids don't jump in front of a train to kill themselves", I would reply. And you, assuming you come from a place that isn't insane, would be puzzled and appalled at my answer.

The thing is, I've gotten used to this lunatic asylum. The overpressured kids in this town, some of whom are expected to somehow Make It Big, can't tolerate the thought of not being one of the 6% that are admitted into, say, Stanford, so they decide to end their lives about 60 years ahead of schedule. I personally think the notion of paying a man to sit, day after day, hour after hour, to guard a fifty foot stretch of track along a 45 mile corridor is preposterous, but I guess the town fathers wanted to show they cared.

The heart of the issue isn't the fact that this one railroad crossing is or isn't guarded by someone. It has to do with what the kids think they have to "achieve" to be worthwhile.

I was reminded of this by the front page story in this morning's Palo Alto Daily Post:

Note the remark in the rightmost column: "The student's death was not connected with the suicide death of an adult man who stepped in front of a Caltrain at Charleston Road on Sunday afternoon." You read that right. The very next day. Oh, and at the exact spot that the gent in the picture above guards..............on weekdays.

Strangeways, here we come.

Aircraft Carrier Stennis Has Biggest Ordnance Onload Since 2010

Nearly two weeks ago, we were surprised to read on the Navy's website that one of America's prize aircraft carriers, CVN-74, John C. Stennis (whose crew is perhaps best known for the following awkward incident), as part of an operational training period in preparation for future deployments, just underwent not only its first ordnance onload since 2010, but, according to Senior Chief Aviation Ordnanceman Jason Engleman, G-5 division's leading chief petty officer, "the biggest ordnance onload we've seen."

From the Stennis' blog:

USS John C. Stennis (CVN 74) visited Naval Magazine (NAVMAG) Indian Island, the Navy’s primary ordnance storage and handling station on the West Coast, to onload six million pounds of ammunition, Jan. 13-15. “This is the biggest ordnance onload we’ve seen,” said Senior Chief Aviation Ordnanceman Jason Engleman, G-5 division’s leading chief petty officer. “We haven’t had an onload since December 2010, and we are ready to show what this warship can do.”


The ship plans to take on two-thirds of its weight capacity during the three day evolution. Bombs, missiles and rounds will be onloaded by 1,400 crane lifts.


“The importance of the Indian Island visit is to provide ammunition for the ship’s defense, and assist with training during this underway,” said Lt. Cmdr. Steve Kashuba, Stennis’ ordnance handler officer.




The ordnance onload was an all-hands evolution and included Sailors from AIMD, air, navigation, safety, security, supply and medical departments. Sailors served as watchstanders, safety observers or ordnance handlers to ensure the evolution ran smoothly.

Why engage in such a major weapon loading process now? We don't know, and we certainly won't until the next deployment of the carrier, currently located in San Diego to receive aircraft and another 2000 sailors, is announced but it does seem coincidental that the same aircraft carrier which the Iranian General Ataollah Salehi warned back in Janiary 2012 "not to return to the Persian Gulf" was being loaded to the gills with weapons ahead of the following three major macro events: i) the sudden and unexpected fall of the US-supported Yemen government; ii) the biggest re-escalation in the Ukraine civil war since the spring of 2014, and iii) the death of the King Abdullah. And who knows what other "unexpected" geopolitical events are about to surprise the world?

While we wait the answer, here are some photos of how the Stennis is loading up with six million pounds of ammo:

Aviation Ordnanceman Airman Joshua Haynes, from Nashville, Tenn., and Aviation Ordnanceman 3rd Class Joseph Dina, from Naperville, Ill., move BLU-111 500-pound bombs during an ammunition on-load aboard Nimitz-class aircraft carrier USS John C. Stennis (CVN 74).


Aviation Ordnanceman 1st Class Donald Theriot, from New Orleans, verifies ordnance placement during an ammunition on-load aboard Nimitz-class aircraft carrier USS John C. Stennis (CVN 74).


Aviation Ordnanceman 2nd Class Matthew Warren takes inventory of BLU-111 500-pound bombs.


Aviation Ordnanceman Mariko Armstrong, from Denver, takes inventory of BLU-111 500-pound bombs.

Aviation Ordnanceman 1st Class David Mele, from San Diego, directs movement of BLU-117 2000-pound bombs.


Sailors prepare to move BLU-117 2000-pound bombs


CBU-99 cluster bombs are staged during an ammunition on-load aboard Nimitz-class aircraft carrier USS John C. Stennis (CVN 74)


BLU-111 500-pound bombs are staged during an ammunition on-load aboard Nimitz-class aircraft carrier USS John C. Stennis (CVN 74).

Aviation Ordnanceman David Black, from Helena, Ala., Aviation Ordnanceman 3rd Class Dillon Simmons, from Lewistown, Mont., and Aviation Ordnanceman 2nd Class Martin Pena, from Bronx, N.Y., prepare to move AGM-88 missiles


Aviation Orndnaceman 3rd Class Garrison Gardner, from Chandler, Ariz., and Aviation Ordnanceman 2nd Class Steven Paxton from Brian, Ohio, prepare to lower a mine kit


Aviation Ordnanceman 3rd Class Dillon Simmons, from Lewistown, Mont., and Aviation Ordnanceman 2nd Class Martin Pena, from Bronx, N.Y., guide AGM-88 missiles as they are lowered


Source: CVN-74