NC Renegades

There is so much confusion out there.  On the days when the Dow goes down by several hundred points, lots of people pat me on the back and tell me that I “nailed” my call for the second half of this year.  But on the days when the Dow goes up by several hundred points, I get lots of people contacting me and telling me that they are confused because they thought the stock market was supposed to go down.  Well, the truth is that if there is going to be a full-blown market meltdown, we would expect for there to be wildly dramatic swings in the market both up and down.  A perfect example of this is what we experienced during the financial crisis of 2008.  9 of the 20 largest single day declines in stock market history happened that year, but 9 of the 20 largest single day increases in stock market history also happened that year.  If we are moving into another great financial crisis, there should be massive ups and massive downs, and that is precisely what we are witnessing right now.

On Tuesday, the Dow surged several hundred points.  There was much celebrating in the mainstream media over this, but what they failed to realize was that this was another big red flag.  And we saw this volatility carry over into Wednesday.  The Dow was up 171 points early in the day before ending down 239 points.

By themselves, those two days don’t mean a whole lot.  The key is to look at them in context.  And in context, we have already witnessed the most dramatic stock market crash since the last financial crisis.

There will be more days when the stock market absolutely plummets and there will be more days when it absolutely soars.  No stock market crash in U.S. history has ever gone in just one direction continually.  There are always giant waves of momentum that cause panic selling and panic buying.

There is one thing that could change that.  A major “black swan event” such as a historic natural disaster, an unprecedented terror attack, or the outbreak of war could potentially be enough to chase all of the buyers out of the marketplace.  And considering the times that we are moving into, those things should not be ruled out.

But minus some type of event like that, we should expect lots of wild swings in both directions.

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http://my.democrats.org/Debate-Pack-Flash-Sale

Moscow has opened a new roundabout route for its ongoing military airlift from Sevastopol in Crimea and other bases in southern Russia to the Syrian Mezze Airbase in Damascus, DEBKAfile’s exclusive military and intelligence sources disclose.

This route runs over the Caspian Sea and northern Iran and Iraq and terminates with deliveries at Damascus and the new Russian air and ground base at Jablah, near the Syrian port of Latakia.

The Russians have in this way circumvented the strong US applications to Turkey, Greek, Bulgaria and Cyprus, to close their airspace to Russian shipments for its military buildup in Syria.

Washington’s actions had two results – one less and the other more desirable.

1. Tehran and Baghdad have both been pulled into directly supporting the Russian military interventkion in Syria, after Iraq was bullied by Iran to turn down the US request to close its northern skies to Russian shipments.

Washington refrained from addressing this request to Iran, in keeping with its policy of avoiding strains on relations until the nuclear deal was endorsed in Washington and Tehran.

As a result, heavy Russian transports are flying over parts of Iraq where US forces, including ground intelligence teams for guiding US air strikes against ISIS, are deployed. This makes accidental collisions in the sky a real danger. The Americans have therefore slowed down their aerial war on ISIS.

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There is a Muslim or Arab, as the case may be, refugee crisis in Europe. Some European countries have rolled out the red carpet and others have refused to take much of an active part in providing sanctuary to these people who are fleeing the wrath of ISIS and the ongoing war in Syria.

The problem is so severe that the Pope chided European countries for not doing more to assist these folks. However, the pontiff failed to mention exactly how many of these people that the Vatican was housing? My guess is that number would be something resembling zero. It is much easier to tell others what they should do than to do that something yourself.

Interestingly not one Middle Eastern Muslim country has taken in even one refugee—not one. But, predictably they have insisted that the European countries help their brethren. It seems that this is a growing trend; create a crisis and then pawn of the victims of the problem off to other countries. Our neighbors to the South have developed a cottage industry of peddling many of their problem people off on the United States. And no doubt our politicians, not content with providing taxpayer assistance to millions of illegal immigrants will now want to import some more folks for taxpayers to support.

It is difficult to turn a blind eye the conditions of the Arabs—some Christians or other religions that have been selected for extermination by ISIS, or, are caught in the crossfire between warring factions in Syria. But, at some point the world must take care of the world without the intervention of the United States. Unfortunately those who think that they are going to a new beginning and a wonderful future will find the same poverty and lack of opportunity in their new surroundings. Also, their living conditions will not be vastly improved—then the demands, problems, and riots will begin.

The problem that I see is that there is no effective way to vet the refugees before allowing them into our country. An Arab sort of looks like an Arab—so how would we know if a given Arab is actually a refugee or a terrorist? ISIS claims to have converted many Arabs to their cause—I don’t drink liberal Kool-Aid so I tend to believe them.

It could be accurately stated that the mess in the Middle East was invented, or at least exacerbated by our current administration. Failing to achieve a status of forces agreement with Iraq after we liberated the country is the main reason for the mess there. When we capriciously pulled our military out of Iraq, it left a vacuum that the forces of ISIS have been more than happy to fill. In Syria, our president drew a red-line in the sand, stating that the use or deployment of chemical weapons would cause the wrath of the United States. Of course they ignored the threat from our titular leader, did exactly what he told them not to do, and there were no consequences.

There are not many intellectual giants in the Middle East, but once these people see that the great Satan is really a paper tiger, our status is relegated to that of the producer of hot air. Now we have what appears to be a done deal on the Iranian nuclear problem even though the majority of Americans are against the deal and no Republican congress member supports the agreement. When we consider that the Iranian Republic Guard will inspect themselves, billions of dollars will be released to fund Hamas and other terrorist organizations, and at best, this deal will only slow the production of nuclear weapons, it is obvious that anyone who is not certifiably brain dead would abhor the deal. Still most of the Democrats will support their leader—kind of like buffalo followed their leader over the cliff to be slaughtered!

When the dim-witted follow the dim-witted no good outcome can be anticipated.

Have a good week. Bill Shuey is a freelance writer from North Carolina.

Why is the price of gold being manipulated down? Then ask yourself what happens when this implodes?

David DeGerolamo

Something Just Snapped At The Comex

Just over one month ago, when looking at the latest changes in registered gold held at the Comex ,we were stunned not only by the collapse in this series to a record low of just over 350k ounces or barely over 10 tons, but also by the surge in “gold coverage”, or the amount of paper gold claims on physical gold, which exploded to a record high 124 per ounce.

This is what we said on August 3:

While on its own, gold open interest – which merely represents the total potential claims on gold if exercised – is hardly exciting, as we have shown previously it has to be observed in conjunction with the physical gold that “backs” such potential delivery requests, also known as the “coverage ratio” of deliverable gold.

It is here that things get a little out of hand, because as the chart below shows, all else equal, the 43.5 million ounces of gold open interest and the record low 351,519 ounces of registered gold imply that as of Friday’s close there was a whopping 123.8 ounces in potential paper claims to every ounces of physical gold.

This is an all time record high, and surpasses the previous period record seen in January 2014 following the JPM gold vault liquidation. 

Another way of stating this unprecedented ratio is that the dilution ratio between physical gold and paper gold has hit a record low 0.8%. Indicatively, the average paper-to-physical coverage ratio since January 1, 2000 is a “modest” 19.1x. As of Friday it had soared to more than 6 times greater.

We showed this record surge in gold claims as follows:

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It is to be expected that economists – even economists working for the same team – have different views about the likelihood of different future outcomes. Economics isn’t rocket science, and even rockets frequently land in the wrong place or explode in mid-air.

That rather hilarious characterization of the pseudoscience that is economics comes from the desk of Citi’s Chief Economist Willem Buiter and it’s apparently evidence that even if you don’t think too much of his views on “pet rocks” (gold is a 6,000 year-old bubble) or on the efficacy and/or utility of physical banknotes (ban cash), you’d be hard pressed to disagree with him when it comes to critiquing his profession. Of course we don’t want to give Buiter too much credit here because the quote shown above could simply be an attempt to stamp a caveat emptor on his latest prediction in case, like his predictions on when Greece would ultimately leave the euro, it turns out to be wrong.

As tipped by comments made at the Council of Foreign Relations in New York late last month, Buiter is out with a damning look at the global economy which he says will be drug kicking and screaming into a recession by the turmoil in China and the unfolding chaos in EM. Here’s the call:

In the Global Economics team, however, we believe that a moderate global recession scenario has become the most likely global macroeconomic scenario for the next two years or so. To clarify further, the most likely scenario, in our view, for the next few years is that global real GDP growth at market exchange rates will decline steadily from here on and reach or fall below 2%.

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Based on the headline from the latest Jobs Friday report you wouldn’t know that we are still mired in an economic emergency—–one apparently so extreme that it might entail moving to the 81st straight month of zero interest rates at next week’s FOMC meeting. After all, the unemployment rate came in smack-dab on the Fed’s full-employment target at 5.1%.

But that’s not the half of it. The August unemployment rate was also in the lowest quintile of modern history.

That’s right. There have been 535 monthly jobs reports since 1970, yet in only 98 months or 18% of the time did the unemployment rate post at 5.1% or lower.

Frankly, Hope n’ Change welcomes Mrs. Clinton’s transformation from old villain to vaudevillian and we suggest that she make a recording of her new stand-up act to put online for her avid followers.

After all, who knows better than she does how inspiring a Youtube video can be.

Try the veal and don’t forget to tip your servers. Or at least wipe them.

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FREEMANSPERSPECTIVE

It’s something of a truism in physics that closed systems tend toward entropy. In other words, building walls around a process will make it degrade faster than it normally would. And this principle clearly applies beyond physics.

An academic named John B. Calhoun famously documented this effect in rat populations. He gave his animals everything they could possibly need but enclosed them in a limited space. Inside their closed system, some males became aggressive, others withdrew psychologically, mothers stopped caring for their young, and eventually their population plummeted, even though there was plenty of food.

Humans are not rats, of course; we are self-referential, thinking beings. Subjected to fully closed systems, we’d break down mentally long before we starved ourselves.

The Human Experiments

The human analog of the rat experiment wouldn’t be constrained physical space, but constrained mental space. And that’s precisely what we’re getting now with mass surveillance. In other words:

Surveillance locks our minds into a closed system.

We know we’re being watched. Every time we look around to see who might be listening, every time we avoid expressing ourselves freely (speaking, writing, whatever), every time we lower our voices so the punishers won’t hear, we are conscious of the fact that we’re living in a closed system. Fear of shame and punishment are the walls around that enclose us.

And we do have empirical evidence on the effects of such closed systems. In a paper entitled The Legacy of Surveillance, Marcus Jacob and Marcel Tyrell wrote this about East German surveillance:

Our empirical evidence suggests that a one standard deviation increase in Stasi (secret police) informer density is associated with… a 10% decrease in organizational involvement, and a 50% reduction in the number of organs donated across the districts in East Germany.

We furthermore find robust evidence that surveillance intensity has a strong negative effect… on current economic performance, and may explain approximately 7% of the East-West differential in income per capita and 26% of the unemployment gap.

So, the surveillance of East Germany produced serious, measurable, and strongly negative results.

Jacob and Tyrell conclude: Continue reading →

Take heart Mr. Farage. At least your government is not controlled by Muslims intent on installing a Caliphate and destroying Christianity.

David DeGerolamo