Thursday, 31 July 2014

Greenspan Bearish – In The Loop.

Baltic Dry Index. 754  +07

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

“There are errors in this book. I do not know where they are. If I did they wouldn't be there. But with close to two hundred thousand words my probabilistic mind tells me some are wrong.”

Alan Greenspan. The Age of Turbulence.

In the strongest bullish news for stock market investors in years, fallen former guru, “Bubbles” Greenspan came out of obscurity yesterday forecasting a “significant correction” in US stocks. Speaking on Bloomberg Television’s “In the Loop” with Betty Liu, the former heavyweight continued “Where that is, I do not know,”  showing that as ever, “Bubbles” was never “in the loop.” While a stopped clock is right twice a day, and the law of averages suggests that the “Great Dissembler” has to get one call right eventually, my guess is that this might just be that call. The Fed’s final bubble, is the mania to end all stock market manias. With the Fedster’s turning off the spigot of QE Forever, ZIRP is about to turn into RIRP.  

The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.

Alan Greenspan.

Greenspan Says Stocks to See ‘Significant Correction’

Jul 30, 2014 4:05 PM GMT
Former Federal Reserve Chairman Alan Greenspan said equity markets will see a decline at some point after surging for the past several years.

“The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction,” Greenspan, 88, said today in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “Where that is, I do not know.”

While Greenspan said he didn’t think equities were “grossly overpriced,” his comments come amid growing concern that interest rates near record lows are creating asset-price bubbles. Fed Chair Janet Yellen said in July 16 congressional testimony that while she saw signs of high valuations in some markets, prices overall -- including for U.S. stocks -- weren’t out of line with historical norms.

But wait, is China about to rain on his forever wet parade?

We really can't forecast all that well, and yet we pretend that we can, but we really can't.

Alan Greenspan.

Global QE ends as China opens second front in bond tapering

China's central bank, and others, have become "major players on world equity markets", effectively fuelling stock bubbles in much the same way they previously fuelled credit bubbles

The spigot of global reserve stimulus is slowing to a trickle. The world's central banks have cut their purchases of foreign bonds by two-thirds since late last year. China has cut by three-quarters.

These purchases have been a powerful form of global quantitative easing over the past 15 years, driven by the commodity bloc and the rising powers of Asia.

They have fed demand for US Treasuries, Bunds and Gilts, as well as French, Dutch, Japanese, Canadian and Australian bonds and parastatal debt, displacing the better part of $12 trillion into everything else in a universal search for yield. Any reversal would threaten to squeeze money back out again.

Jens Nordvig, from Nomura, said net foreign reserve accumulation by central banks fell to $63bn in the second quarter of this year, from $89bn in the first quarter, and $181bn in the fourth quarter of 2013. These data are adjusted for currency swings, and are fresher than the delayed figures published by the International Monetary Fund.

"There are major shifts going on global capital markets. People have been lulled into a false sense of security by low volatility and they haven't paid attention. We're not seeing any risk aversion in financial markets," he said

The world superpower in this game is China, with reserves just shy of $4 trillion. Mr Nordvig estimates that China's purchases dropped to $27bn in the last quarter, down from $106bn in the preceding quarter. This looks like a permanent shift in policy.

Premier Li Keqiang said in May that the reserves had become a "big burden" and were doing more harm than good, playing havoc with monetary policy, as global economists have been warning for a long time. China's policy of holding down the yuan for mercantilist trade advantage caused it to import excess stimulus from America at the wrong moment in its own cycle, causing China's credit boom to go parabolic as loans rose from $9 trillion to $25 trillion in five years.

Up next, today Argentina, tomorrow Uncle Scam the day the world moves away from the fiat dollar reserve standard. Stay long fully paid up physical gold and silver held outside of America and Great Britain against that day arriving.

Finance is wholly different from the rest the economy.

Alan Greenspan.

Argentina Declared in Default by S&P as Talks Fail

Jul 31, 2014 3:10 AM GMT
Standard & Poor’s declared Argentina in default after the government missed a deadline for paying interest on $13 billion of restructured bonds.

The South American country failed to get the $539 million payment to bondholders after a U.S. judge ruled that the money couldn’t be distributed unless a group of hedge funds holding defaulted debt also got paid. Argentina, in default for the second time in 13 years, has about $200 billion in foreign-currency debt, including $30 billion of restructured bonds, according to S&P

Argentina and the hedge funds, led by billionaire Paul Singer’s Elliott Management Corp., failed to reach agreement in talks today in New York, according to the court-appointed mediator in the case, Daniel Pollack. In a press conference after the talks ended, Argentine Economy Minister Axel Kicillof described the group of creditors as “vulture funds” and said the country wouldn’t sign an accord under “extortion.”

“The full consequences of default are not predictable, but they certainly are not positive,” Pollack wrote in an e-mailed statement. “Default is not a mere ‘technical’ condition, but rather a real and painful event that will hurt real people.”

In European news, is Portugal the next Cyprus?  The management of Portugal’s Holy Ghost bank seems to have stopped doing God’s work according The Bank of Portugal. Anyone feel a bank bail-in down the road?

History has not dealt kindly with the aftermath of protracted periods of low risk premiums.

Alan Greenspan.

Espirito Santo to Raise Capital After 3.6 Billion-Euro Loss

Jul 31, 2014 1:56 AM GMT
Banco Espirito Santo SA said it needs to raise capital after posting a first-half net loss of 3.6 billion euros ($4.8 billion) as it created provisions for its exposure to companies of Grupo Espirito Santo, which includes its biggest shareholder.

Impairment and contingency costs were 4.25 billion euros, Lisbon-based Banco Espirito Santo said yesterday in a filing. The bank also said it wrote off “irrecoverable” interest on loans granted by its Angolan unit BESA. The lender’s common equity Tier 1 ratio was 5 percent as of June 30, below the Bank of Portugal’s minimum requirement of 7 percent.

“Over the course of the past few weeks, both shareholders and potential investors have shown interest in participating in a capitalization plan, some of them willing to take relevant stakes in the bank,” Chief Executive Officer Vitor Bento said in a separate statement. “A process to increase the bank’s capital will be initiated immediately.” He also said the bank will consider asset sales.

Banco Espirito Santo shares have slumped 42 percent this month as three parent companies linked to the Espirito Santo family requested protection from creditors. Bank of Portugal Governor Carlos Costa has tried to reassure depositors and investors that Banco Espirito Santo could withstand any losses resulting from loans to Espirito Santo Group companies after some of that group’s units missed commercial paper payments.

--- The central bank said it’s suspending Banco Espirito Santo officials in charge of audit, compliance and risk management. It’s also restricting the voting rights of Espirito Santo Financial Group SA, or ESFG, in Banco Espirito Santo, the Bank of Portugal said in its statement.

The Bank of Portugal said there are indications of “seriously harmful acts of management” at the lender and a failure to comply with the central bank’s directives. It said it’s reviewing the actions of various individuals, including Ricardo Salgado, who was replaced by Bento as CEO this month.

In other EUSSR news this morning, Uncle Scam is busy incentivising one and all, but especially European banksters, to come up with a way to do in the fiat dollar reserve standard. In the EUSSR, with American friends like this who needs phony Russian enemies. Dryly the bank noted “The lender took charges of 5.75 billion euros for the fine and an additional 200 million euros to pay for its plan to improve compliance procedures. Leaving aside one-time items, the bank said it earned 1.92 billion euros in the quarter.” Other than that, Mrs. Lincoln, what did you think of the play?

The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.

Alan Greenspan.

BNP Paribas Posts Record Second-Quarter Loss on U.S. Fine

Jul 31, 2014 6:42 AM GMT
BNP Paribas SA (BNP), France’s biggest bank, posted the largest loss in its 14-year history after paying a record fine for doing business with Sudan and other countries blacklisted by the U.S.

The net loss amounted to 4.32 billion euros ($5.8 billion), Paris-based BNP said in an e-mailed statement today. That’s the second quarterly loss since the bank was formed from a merger in 2000, and compares with the 4.27 billion-euro loss average of 11 analyst estimates compiled by Bloomberg.

BNP Paribas was fined $8.97 billion after pleading guilty to criminal charges in the U.S. on June 30, a record sum for a bank accused of violating U.S. sanctions. Prosecutors said the lender processed almost $9 billion in prohibited transactions from 2004 to 2012. The U.S. also barred the bank from certain dollar-clearing operations next year.

We end with yet more gloom in banksterland. God’s work just doesn’t pay anymore. Coming soon to a Main Street street-corner near you, a pah handling ex-member of the one percent?

Banks are an almost irresistible attraction for that element of our society which seeks unearned money.

J. Edgar Hoover

Investment Bank Job Cuts Loom as Cost Drop Trails Revenue

Jul 31, 2014 12:01 AM GMT
The largest global investment banks face further cost reductions, like the job cuts JPMorgan Chase & Co. (JPM) began this month, after a drop in first-half expenses failed to match a decline in revenue.

Pretax profit at the banking and trading units at seven of the nine largest firms fell in the first six months as costs for the group decreased less than 1 percent from the same period a year earlier, according to data compiled by Bloomberg. Revenue dropped 5 percent, driven by the worst first-half trading results since the financial crisis.

Banks have relied on cost-cutting in recent years as higher capital requirements and fixed-income trading revenue crimped by low interest rates eroded profit. JPMorgan, the biggest U.S. lender, is eliminating hundreds of technology-support employees at its corporate and investment bank, people with knowledge of the move said. Credit Suisse Group AG (CSGN) said last week it would cut expenses by exiting commodities trading and scaling back currency and rates businesses.

“You’re always overstaffed at the bottom and understaffed at the top,” said Jason Goldberg, a Barclays Plc analyst in New York who covers U.S. banks. “It’s a tough balance between cutting costs and wanting to have enough people around for when volatility and activity pick up.”

“I know you think you understand what you thought I said , but I'm not sure you realize that what you heard isn't what I meant”

Alan Greenspan.

At the Comex silver depositories Wednesday final figures were: Registered 59.21 Moz, Eligible 117.55 Moz, Total 176.76 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

No crooks today, just an update on the real market in physical gold, which unlike “paper” gold, cannot be fabricated out of nothing. 
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”

Alan Greenspan.

Gold ETPs Halt Outflows as Buyers Return Amid Price Slump

Jul 31, 2014 5:42 AM GMT
Gold investors who pulled money out of U.S. exchange-traded products through the first half of 2014 rushed back in July, just as prices resumed a decline that Barclays Plc and Goldman Sachs Group Inc. say will get worse.

ETPs backed by precious metals took in $536.81 million this month as of July 29, a 1 percent gain for funds that saw a net outflow of $319 million in six months through June, data compiled by Bloomberg show. This month’s 2 percent drop in futures left prices down 7 percent from a 2014 peak in March.

The appeal of gold as a haven increased since Russia backed a rebellion in Ukraine and as violence escalated in the Middle East and North Africa. While the metal has outperformed equities and bonds so far this year -- gains that Citigroup Inc. says will hold -- analysts in a Bloomberg survey predict prices will drop in the fourth quarter as economic growth spurs a shift to U.S. equities already at all-time highs.

----The July slump for gold was fueled partly by concern that the Federal Reserve will raise U.S. interest rates, after easing monetary stimulus the central bank created since 2008 to spur economic growth. Yesterday, the central bank reduced monthly bond purchases to $25 billion, capping six straight cuts of $10 billion each since November.

“under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth... The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation”

Alan Greenspan. 1966.

The monthly Coppock Indicators finished June

DJIA: +169 Down. NASDAQ: +332 Down. SP500: +241 Down.  The Fed’s final bubble still grows, but …..

Wednesday, 30 July 2014

Own Goals.

Baltic Dry Index. 747  +04

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

F. A. von Hayek

Don’t fight the Fed, goes the old Wall Street saying. Meaning the Fed can stay irrational longer than you can stay solvent, to misquote J. M. Keynes.  This morning J. P. Morgan gives us its 21st century update. Meanwhile the US Navy beats something of a Pacific retreat. Both something that says volumes about the coming end of the Great Nixonian Error of fiat money and the dollar reserve standard. Stay long fully paid up physical gold and silver for the transition.

JPMorgan Says Don’t Fight PBOC as Stimulus Lifts Stocks

Jul 30, 2014 3:55 AM GMT
Don’t fight the People’s Bank of China.

That’s the advice to investors from Adrian Mowat, the Hong Kong-based chief Asia and emerging-market strategist at JPMorgan Chase & Co. who raised his rating on Chinese stocks to neutral from underweight in a report dated yesterday. He said shares will rally through October after the Hang Seng China Enterprises Index (HSCEI) entered a bull market on July 28.

China’s central bank presided over a bigger-than-estimated surge in new credit in June and has cut reserve requirements for some lenders, while local media reported the PBOC set up a 1 trillion yuan ($162 billion) lending facility with the China Development Bank to fund housing projects. The signs of monetary easing, along with accelerated government spending and gains in manufacturing industries, have spurred mutual fund managers to boost Chinese stock holdings to record highs, according to a July 28 report from HSBC Holdings Plc.

“The scale of monetary stimulus since June is a surprise,” Mowat wrote. “All these changes indicate a more aggressive approach to driving growth.”

Mowat is joining bulls, including Standard Chartered Plc’s Erwin Sanft and Templeton Emerging Markets Group’s Mark Mobius, who predict the rally will extend as low valuations lure investors and the government supports growth. Bears such as Bank of America Corp.’s David Cui say stimulus is delaying the economy’s shift toward a more sustainable model driven by consumption and services.

The Hang Seng China Enterprises index rose 0.5 percent to 11,180.24 at 10:41 a.m. in Hong Kong, climbing for a seventh day in the longest winning streak in four years. The measure is set to close at the highest level since Dec. 10. China’s Shanghai Composite Index (SHCOMP) of mainland shares slipped 0.1 percent.

Aggregate financing was 1.97 trillion yuan in June, the PBOC said on July 15, compared with the median estimate of analysts for 1.425 trillion yuan. New local-currency loans were 1.08 trillion yuan and M2 money supply grew 14.7 percent from a year earlier.

Premier Li Keqiang said in June that authorities will “ensure” a minimum annual economic growth rate of 7.5 percent. China’s manufacturing industries expanded at the fastest pace in 18 months in July, according to a preliminary purchasing managers’ index from HSBC Holdings Plc and Markit Economics. Industrial companies reported a 17.9 percent gain in earnings in June from a year earlier, the fastest pace since September.

Investors’ sentiment on Chinese stocks has improved over the past few days amid speculation the economy will stabilize in coming quarters, Jason Sun and Minggao Shen, analysts at Citigroup Inc., said in a report yesterday.

U.S. Says More Chinese Drills a ‘Natural Evolution’

Jul 30, 2014 1:58 AM GMT
An increase in Chinese maritime exercises in the Pacific is a “natural evolution” and the drills will grow in complexity as the navy boosts its capacity, commander of the U.S. 7th Fleet Vice Admiral Robert Thomas said.

China is expected to keep up a “steady drumbeat” of exercises in the region, Thomas told reporters yesterday at the opening ceremony of a bilateral naval exercise with Singapore known as CARAT Singapore.

“This is a natural evolution for the PLAN as they improve their professionalism, as they improve both their capacity and capability,” he said, referring to the People’s Liberation Army Navy. “You should expect more exercises, and frankly more complex exercises.”

China is holding drills across the East and South China Seas that may add to tensions with neighbors over territory as President Xi Jinping expands the reach of the navy to position the country as a maritime power. President Barack Obama has said the U.S. isn’t seeking to contain China and that there’s room to accommodate China’s growing economic and military clout.

China has described the exercises, which include a live-firing drill in the South China Sea, as routine even as they are larger in scope. The nation is ratcheting up pressure on neighbors including Japan and the Philippines as the U.S. reassures its allies it remains committed to its policy for an economic and strategic rebalancing to the region.

But all is not well in Pandaland. We note with rising concern increasing sign of social unrest in mainland China. Will/is America’s War Party trying to stage another Kiev?

Clashes in China’s Xinjiang Leaves ‘Dozens’ Dead

Jul 30, 2014 5:37 AM GMT
Clashes between police and a knife-wielding gang killed dozens of people in China’s turbulent Xinjiang region, marking a new escalation of violence after a series of bomb attacks in recent months.

The violence on July 28 was a premeditated terrorist act, the official Xinhua News Agency reported. The gang attacked a police station and government offices in Xinjiang’s Kashgar area, killing or wounding dozens of people. Police responded by shooting dead “dozens of members of the mob,” Xinhua said.

The violence may the deadliest since a series of explosions in Xinjiang in May killed 31 people. Authorities have tightened security and stepped up police patrols amid discord between ethnic Han Chinese and the minority Muslim Uighur population. China started a yearlong campaign against violence, and President Xi Jinping pledged to “spare no effort” to maintain stability in the region.

The latest attack “is being handled in a proper way,” Vice Public Security Minister Huang Ming said at a briefing in Beijing today.

Last month, Xinjiang law enforcement officers shot dead 13 people after a group rammed a truck into a police station and set off explosives, Xinhua reported on June 21. Shache, the site of this week’s violent clash, was previously assaulted on Dec. 30, when nine knife-wielding terrorists attacked a police station, throwing explosives and setting police cars on fire. Police shot and killed eight attackers.

Thirty-one cars were vandalized in the July 28 incident, six of which were set on fire, Xinhua said. The assailants attacked civilians and smashed vehicles, the agency said.

In other less bullish news, more own goals in the west’s struggle to reach escape velocity from casino capitalism and the Great Recession.

U.S. Stocks Fall as Russian Sanctions Overshadow Earnings

Jul 29, 2014 9:40 PM GMT
U.S. stocks fell as President Barack Obama announced new sanctions against Russia and warned its actions in Ukraine are “setting back decades of progress,” snuffing out earlier gains led by telephone stocks.

United Parcel Service Inc. slid 3.7 percent after cutting its full-year forecast. Windstream Holdings Inc. surged 12 percent on plans to spin off assets into a publicly traded real estate investment trust. Masco Corp. (MAS) and Merck & Co. gained after reporting earnings that topped analysts’ projections. Twitter Inc. soared 33 percent after the market’s close as second-quarter revenue beat estimates.

----The U.S. sanctioned three Russian banks and a state-owned shipbuilder that serves Russia’s navy and oil and gas industry, joining with the European Union in escalating the penalties for Russia over its actions in Ukraine.

The EU curbed Russia’s access to bank financing and advanced technology in its widest-ranging sanctions yet. EU governments agreed to bar Russian state-owned banks from selling shares or bonds in Europe and restricted the export of equipment to modernize the oil industry, a key prop for Russia’s economy, an EU official said.


How Argentina’s Default May Trigger $29 Billion in Claims

Jul 29, 2014 6:24 PM GMT
By defaulting tomorrow, Argentina may trigger bondholder claims of as much as $29 billion -- equal to all its foreign-currency reserves.

If the overdue interest on Argentina’s dollar-denominated securities due 2033 isn’t paid by July 30, provisions in bond indentures known as cross-default clauses would allow the nation’s other debt holders to also demand their money back immediately. The amount corresponds to Argentina’s debt issued in foreign currencies and governed by international laws.

U.S. District Court Judge Thomas Griesa blocked Argentina’s attempt last month to transfer the $539 million in interest after the nation didn’t set aside money for holdout creditors, who won a ruling that entitled them to full repayment of obligations that Argentina repudiated in 2001. While Citigroup Inc. says there’s little chance investors will invoke the pay-back clauses in coming weeks, potential claims are large enough to exhaust the country’s reserves.

“It would mean that Argentina is in default on most all of its debt and presumably everybody would be in the same boat,” Anna Gelpern, a fellow at the Peterson Institute for International Economics and a law professor at Georgetown University, said in a telephone interview.

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton

At the Comex silver depositories Tuesday final figures were: Registered 58.03 Moz, Eligible 117.53 Moz, Total 175.66 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over. 

Yesterday on America’s orders, the EUSSR played Russian roulette and immediately lost in round one. If the latest sanctions are actually implemented, and with the EUSSR watch what they do not what they say, by this time next year Germany will be alongside snake bit France in the EUSSR’s intensive care ward. Uncle Scam might not have knocked out Belarus and Russia with his over reached botched coup in Kiev, but he gets the consolation prize of knocking Germany out of a reviving EurAsia. 

John Bull, already embroiled in its own love-hate relationship with Russia is cheering for now, but what does this mean for English Premier League football, now heavily dependent on cash from Russian oligarchs? More importantly for the EUSSR, What will real sanctions do to France and dead in the water Club Med. 

"The history of paper money is an account of abuse, mismanagement, and financial disaster."

Richard M. Ebeling

Siemens to BP Prepare for Downward Russia Business Spiral

Jul 29, 2014 11:01 PM GMT
BP Plc (BP/), Siemens AG (SIE) and Renault SA (RNO) are among European companies preparing for a downward turn in their Russian business following the European Union’s decision to impose its widest-ranging sanctions yet over President Vladimir Putin’s involvement in eastern Ukraine.

EU leaders announced plans yesterday to restrict the export to Russia of equipment to modernize the oil industry and forbid the sale of machinery, electronics and other civilian products with military uses. New arms contracts are also not allowed.

The sanctions will have a direct impact on companies like Siemens, which may no longer be able to sell oil equipment to Russia, and an indirect affect on many others like Renault, which expects the country’s auto market to contract more than 10 percent in 2014 as consumers hold back purchases. BP, owner of 20 percent of state-backed OAO Rosneft (ROSN), yesterday warned of risks to its profit and production due to the crisis.

“In Europe, for some companies this is becoming a major problem, and they can see it becoming an even bigger one,” said Andrew Kenningham, an economist at research firm Capital Economics. “The long-term impact of a standoff, if it continues, is clearly very bad for business confidence and future investment in Russia.”

----German exports to Russia could contract 10 percent to 20 percent as a result of the escalating crisis, said Martin Wansleben, head of the Association of German Chambers of Commerce and Industry. German trade with Russia was worth almost $88 billion last year, according to data compiled by Bloomberg. Germany is the EU’s largest exporter to Russia.

The new EU measures also bar Russian state-owned banks from selling shares or bonds in Europe. New U.S. sanctions announced yesterday target VTB Bank (VTBR), Bank of Moscow and the Russian Agricultural Bank. United Shipbuilding Corp., which has contracts with the Russian military, also was sanctioned.

The pain from sanctions may be felt most sharply in the energy sector. Rosneft, led by Putin ally Igor Sechin, is trying to tap deposits of hard-to-access oil locked in shale formations and deep underwater, in order to compensate for stagnant production from conventional fields. The company is Russia’s largest oil producer.

----Siemens, whose 3,100 employees in Russia helped generate 2.2 billion euros ($2.95 billion) in sales from the country last year, counts the likes of OAO Gazprom (OGZD) and pipeline operator OAO Transneft among its customers. The Munich-based company is also providing electrical equipment for OAO Lukoil (LKOD)’s Filanovskaya oil platform in the Caspian Sea, while its train-making joint venture has signed a memorandum of understanding with Russian Railways to supply 675 freight locomotives by 2020.


On Dominoes, WMDs And Putin’s “Aggression”: Imperial Washington Is Intoxicated By Another Big Lie

by David Stockman • 
Imperial Washington is truly running amuck in its insensible confrontation with Vladimir Putin. The pending round of new sanctions is a counter-productive joke. Apparently, more of Vlad’s posse will be put on double probation, thereby reducing demand for Harry Macklowe’s swell new $60 million apartment units on Park Avenue. Likewise, American exporters of high tech oilfield equipment will be shot in the foot with an embargo; and debt-saturated Russian state companies will be denied the opportunity to bury themselves even deeper in dollar debt by borrowing on the New York bond market. Some real wet noodles, these!

But it is the larger narrative that is so blatantly offensive—that is, the notion that a sovereign state is being wantonly violated by an aggressive neighbor arming “terrorists” inside its borders. Obama’s deputy national security advisor, Tony Blanken, stated that specious meme in stark form yesterday:

“Russia bears responsibility for everything that’s going on in Eastern Ukraine” and “has the ability to actually de-escalate this crisis,” Blinken said.

Puleese! The Kiev government is a dysfunctional, bankrupt usurper that is deploying western taxpayer money to wage a vicious war on several million Russian-speaking citizens in the Donbas—-the traditional center of greater Russia’s coal, steel and industrial infrastructure. It is geographically part of present day Ukraine by historical happenstance. For better or worse, it was Stalin who financed its forced draft industrialization during the 1930s; populated it with Russian speakers to insure political reliability; and expelled the Nazi occupiers at immeasurable cost in blood and treasure during WWII. Indeed, the Donbas and Russia have been Saimese twins economically and politically not merely for decades, but centuries.

On the other hand, Kiev’s marauding army and militias would come to an instant halt without access to the $35 billion of promised aid from the IMF, EU and US treasury. Obama just needs to say “stop”. That’s it.
The civil war would quickly end, permitting the US, Russia and the warring parties of the Ukraine to hold a peace conference and work out the details of a separation agreement.

Sir Humphrey: Minister, Britain has had the same foreign policy objective for at least the last five hundred years: to create a disunited Europe. In that cause we have fought with the Dutch against the Spanish with the Germans against the French, with the French and Italians against the German, and with the French against the Germans and Italians. Divide and rule, you see. Why should we change now, when it's worked so well?

Hacker: That's all ancient history, surely?

Sir Humphrey: Yes, and current policy. We 'had' to break the whole thing [the EEC] up, so we had to get inside. We tried to break it up from the outside, but that wouldn't work. Now that we're inside we can make a complete pig's breakfast of the whole thing: set the Germans against the French, the French against the Italians, the Italians against the Dutch. The Foreign Office is terribly pleased; it's just like old times.

Hacker: But surely we're all committed to the European ideal?

Sir Humphrey: [chuckles] Really, Minister.

Hacker: If not, why are we pushing for an increase in the membership?

Sir Humphrey: Well, for the same reason. It's just like the United Nations, in fact; the more members it has, the more arguments it can stir up, the more futile and impotent it becomes.

Hacker: What appalling cynicism.

Sir Humphrey: Yes... We call it diplomacy, Minister.

Yes minister.

The monthly Coppock Indicators finished June

DJIA: +169 Down. NASDAQ: +332 Down. SP500: +241 Down.  The Fed’s final bubble still grows, but …..