Sun
SEP 23 18 SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they
documented with graphics
"The business of
buying weapons that takes place in the Pentagon is a corrupt business -
ethically and morally corrupt from top to bottom. The process isdominated by advocacy, with few,
if any, checks and balances. Most people
in power like this system of doing business and do not want it changed."
"The business of buying weapons that takes place in the Pentagon
is a corrupt business - ethically and morally corrupt from top to bottom. The
process is dominated by advocacy, with few, if any, checks and balances. Most
people in power like this system of doing business and do not want it
changed."
– Colonel James G.
Burton (1993, 232)
In countries such as
the United States, whose economies are commonly, though inaccurately, described
as "capitalist" or "free-market," war and preparation for
war systematically corrupt both parties to the state-private transactions by
which the government obtains the bulk of its military goods and services.
On one
side, business interests seek to bend the state's decisions in their favor by
corrupting official decision-makers with outright and de facto bribes.The
former include cash, gifts in kind, loans, entertainment, transportation,
lodging, prostitutes' services, inside information about personal investment
opportunities, overly generous speaking fees, and promises of future employment
or "consulting" patronage for officials or their family members,
whereas the latter include campaign contributions (sometimes legal, sometimes
illegal), sponsorship of political fund-raising events, and donations to
charities or other causes favored by the relevant government officials.
All of
these unsavory actions, however, are typically viewed as aberrations —
misfeasances to be rectified or malfeasances to be punished while retaining the
basic system of state-private cooperation in the production of military goods
and services (for an explicit example of the "aberration" claim, see
Fitzgerald 1989, 197–98). I maintain, in contrast, that these offenses and even
more serious ones are not simply unfortunate blemishes on a basically sound
arrangement, but superficial expressions of a thoroughgoing, intrinsic
rottenness in the entire setup.
With
military-economic fascism, however, the line becomes blurred, and a substantial
number of people actively hop back and forth across it: advisory committees, such as the Defense Science Board and
the Defense
Policy Board and university administrators meet regularly with
Pentagon officials (see Borger 2003 for a report of an especially remarkable
meeting), and the revolving door spins furiously — according to a September
2002 report, "[t]hirty-two major Bush appointees are former executives,
consultants, or major shareholders of top weapons contractors" (Ciarrocca
2002, 2; see also Hamburger 2003, Doward 2003, Stubbing 1986, 90, 96, and Kotz
1988, 230), and a much greater number cross the line at lower levels.
Moreover,
military-economic fascism, by empowering and enriching wealthy, intelligent,
and influential members of the public, removes them from the ranks of potential
opponents and resisters of the state and thereby helps to perpetuate the
state's existence and its intrinsic class exploitation of people outside the
state. Thus, military-economic fascism simultaneously strengthens the state and
weakens civil society, even as it creates the illusion of a vibrant private
sector patriotically engaged in supplying goods and services to the heroic
military establishment (the Boeing
Company's slickly
produced television ads, among others, splendidly illustrate this
propagandistically encouraged illusion).
Although headlines alone cannot convey the resplendently
lurid details, they can suggest the varieties of putrid sloughs that drain into
the swamp:
Read this long list and then go to
this subtitles:
Legal Corruption of Government Officials
Absence of Proper Accounting Invites Theft
PAC Contributions to Politicians and Their Parties Are Bribes
How Government Corrupts Business
Can Anything Be Done?
…
The Roosevelt administration, desperate to build up the nation's capacity
for war after the breathtaking German triumphs in the spring of 1940, made an
abrupt about-face, abandoning its relentless flagellation of businessmen and
investors and instead courting their favor as prime movers in the buildup of
the munitions industries. Most businessmen, however, having been
anathematized and legislatively pummeled for the past six years, were reluctant
to enter into such deals, for a variety of reasons, chief among them being
their fear and distrust of the federal government (Higgs 2006a, 36–38).
All of these arrangements, with greater or lesser variations in their
details from time to time, became permanent features of the MICC (US
Senate, Committee on Armed Services 1985, 35, 42, 553–67).
Figure 1 shows the
amounts transferred during the past nine election cycles.
See Figure 1.
Contributions by "Defense" Interests in Federal Elections,
1990–2006
CONCLUDING REMARK:
As Ludwig von Mises
observed, "The root of the evil is not the construction of new, more dreadful
weapons. It is the spirit of conquest…. The main thing is to discard the
ideology that generates war" (1966,
832; see also Higgs and Close 2007). Until the scope of the US
government's geopolitical ambitions and hence the scale of its military
activities are drastically reduced, not much
opportunity will exist for making its system of military-economic fascism less
rapacious and corrupt.
….
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We are not inventing the neoliberal collapse.. investors are
saying so
"What is different now is that, as
this debt comes due, it is unlikely that companies will be able to roll to
lower rates than they are currently paying."
There is one major
consequence of this transition: interest expenses
will flip from a tailwind for EPS growth to a headwind on a go-forward basis
and in some cases will create a risk to guidance. As shown in the
chart below, in aggregate, total interest has increased over the course of this
cycle, though it has largely lagged the overall increase in debt levels.
See Charts:
According to
Goldman's calculations, the average maturity of
new issuance in recent years has averaged between 15-17 years, up from 11-13
years earlier this cycle and <10 years for most of the late 1990’s and early
2000’s.
And while this has
pushed back the day when rates catch up to the overall increase in debt, as is
typically the case, there is nonetheless a
substantial amount of debt coming due over the next few years: according to the
bank's estimates there is over $1.3 trillion of debt for our non-financials
coverage maturing through 2020, roughly 20% of the total debt outstanding.
See Charts:
And while Goldman
economists assign a low likelihood that this will change anytime soon, there
has been a sharp pickup in the “Recession
2020” narrative as of late. Specifically, along with the growth of
the fiscal deficit which will see US debt increase by over $1 trillion next
year, the fact that debt growth has outpaced
EBITDA growth this cycle has implications for investors if and when the cycle
turns.
Which
brings us round circle to the potential catalyst of the next crisis: record
debt levels.
According to
Goldman's calculations, Net Debt/EBITDA for its
coverage universe as a whole remains near the highest levels this cycle, if not
all time high. And while the bank cannot pinpoint exactly when the
cycle will turn, it is easy to claim that US companies
are “over-earning” relative to their cycle average today, a key points as the
Fed continues "normalizing" its balance sheet. Indeed,
this leverage picture looks even more stretched when viewed through a “normalized EBITDA” lens (which Goldman defines
as the median LTM 2007 Q1-2018 Q2).
See
Charts:
Picking up on several
pieces we have written on the topic (most recently "Fallen
Angel" Alert: Is Ford's Downgrade The "Spark" That Crashes The
Bond Market"), Goldman specifically highlights the potential high
yield supply risk that could unfold.
Here are the
numbers: currently there are $2tn of non-financial bonds rated BBB,
the lowest rating across the investment grade scale. The amount has
increased to 58% of the non-financial IG market over the last several years and
is currently at its highest level in the last 10 years.
From a market
standpoint, too many bonds falling to the high yield market would create excess
supply and potentially pressure prices. Looking
back to prior cycles, approximately 5% to 15% of the BBB rated bonds were
downgraded to high yield. If we assume the same percentages are applied to
a theoretical down-cycle today, a staggering $100-300bn of debt could be
at risk of falling to the high yield market in a cycle correction, an outcome
that would choke the bond market and shock market participants. It
is also the reason why Bank of America recently warned that the ECB can not
afford a recession, as the resulting avalanche of "fallen angels"
would crush the high yield bond market, sending shockwaves across the entire
fixed income space.
And while such a
reversal is not a near-term risk given solid sales/earnings growth and low
recession risk, "it is potentially problematic
given the current size of the high yield market is only $1.2tn."
Should the market
indeed turn, prices would need to adjust - i.e.
drop sharply - in order to generate the level of demand that would
require a potential 25% increase in the size of the high yield market –
especially at a time when risk appetite could be low.
See Charts:
In other
words, investors who are exposed to debt in the following names may want to
reasses if holding such risk is prudent in a time when, for the first time in a
decade, the average interest expense is expected to tick higher.
See table
….
….
SOURCE: https://www.zerohedge.com/news/2018-09-23/goldman-warns-default-wave-13-trillion-debt-set-mature
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"US economic and equity market resilience - despite tariffs - will
embolden the President on all geopolitical fronts – autos, NAFTA and
particularly Iran – and thus risk a major miscalculation from sanctions
that are tough to calibrate." - JPMorgan
Goldman said that following Trump’s threat of further
escalation in the trade war with China, the bank now thinks the probability that all imports from China will
ultimately be subject to tariffs has risen to 60%.
See Chart:
And, in a note from JPMorgan's strategists over the weekend,
the bank expressed a similar - if even more nuanced - concern, warning that it
is starting to make "forecast and strategy changes" around issues
emerging from the US-China conflict.
One is the growing possibility that the US-China trade war
enters Phase III in 2019, resulting in tariffs on all +$500bn of imports from
China, similar to Goldman's conclusion. The
bank notes that without more policy easing, this scenario implies weaker China growth, which
directly impacts the commodity complex’s incipient recovery. And depending on the weight
authorities give to monetary versus fiscal measures over the next 6 to 12
months, the renminbi
could depreciate sufficiently to pull EM Asia and the non-oil commodity complex
lower.
The other, and more interesting, concern is that US economic
and equity market resilience - despite tariffs - will embolden the President
on all geopolitical fronts – autos, NAFTA and particularly Iran – and thus risk
a major miscalculation from sanctions that are tough to calibrate.
This possibility is the driver behind JPM’s revised oil
price forecast for the next several quarters, from a previous average price
forecasts for Brent of the low $60s (mid-$50s on WTI) in Q4 2018 and Q1 2019 to
$85/bbl (WTI $76/bbl) over the
next six months, with even a spike to $90/bbl increasingly likely. As a reminder, some analysts still believes that it was oil's
superspike in the summer of 2008 that ultimately catalyzed the collapse of
Lehman.
Meanwhile, should Trump escalate trade war with China and
impose 25% tariffs on all imports from China, it would take $8 off consensus
2019 EPS projections of $179 and reduce next year’s EPS growth from 10% to 5%
year-on-year.
"Even
with a forward multiple of 17, an EPS downgrade this large would end the US
stock rally unless some other offset materialized."
In a similar
analysis two weeks ago, Goldman predicted that a 10% tariff imposed by the
US on all global imports would lead to a 25% drop in the S&P, to as low as
2,200, resulting in a bear market, and wiping out $6 trillion in market cap.
See Charts:
Trump's cockiness aside, going back to the latest market
rally, JPMorgan also asks if it is the beginning of an unmissable strategic opportunity (lasting
six months or more, delivering at least 10% upside) or just a more tactical one (lasting another
week or two, delivering about 5% upside)?
In its response, JPM believes that on one hand a "strategically
bullish view" is based on risk premia which are so high in
assets like EM, the DAX, Autos, Base Metals and Metals & Mining stocks that
they can absorb escalation, since by now most observers accept that this
conflict will endure at least as long as Trump remains President.
Alternatively, a "strategically neutral but tactically positive view" runs like
this:
- any estimates of first-round effects should be doubled or tripled given the immeasurable second-round effects around confidence, supply-chain disruption and tighter financial conditions, so apparently-cheap assets no longer look so compelling when adjusted for uncertainties;
- country-level improvements in key markets have been incremental rather than transformational;
- short covering could extend a few percent over the next week around the Sep 26th FOMC if the committee removes the word “accommodative” from its statement describing its monetary stance, thus suggesting that it might be near the end of its hiking cycle.
For what it's worth, JPM's increasingly cautious view - in
light of Trump's unpredictability - is that when asked if the rally is
"unmissably strategic", or "tactical", the conviction
across the bank's various research teams, "is higher around the latter than the
former." In other words, ride it out but be ready to bail.
…
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"Though it seems like only yesterday, it’s been a decade since my
former employer, Lehman Brothers, went bankrupt... In some ways, we seem much better off now - employment
and asset prices are booming...But that
only tells half the story..."
Though it seems like only yesterday, it’s been a decade since my former employer, Lehman
Brothers, went bankrupt, and in the process, helped instigate a massive
global financial crisis. That
collapse catapulted the Federal Reserve on a mission to, in its own narrative, save the economy from further collapse. In
fact, its creation of $4.5 trillion to
purchase U.S. treasury and mortgage related bonds from the big private banks in
exchange for continued liquidity was the
biggest subsidy in U.S. history.
But that only
tells half the story.
That’s because the last financial
crisis was about debt and debt levels have increased substantially since 2008.
The entire “recovery” was built on debt.
From 179%
before the financial crisis, the global debt-to-GDP ratio has jumped to 217%
today. Companies and governments have piled on more debt than before. Emerging-market debt, led by
China, is also at a record. The big banks are even bigger, and remain “too big
to fail.”
Eliminating
all that debt is the ultimate solution for avoiding another crisis.That’s
because if interest rates drift higher, it can lead to problems in debt
repayment, followed by defaults, followed by crisis as defaults spread like a
contagion. But there’s no magic bullet for doing that.
In
essence, central banks “print” money or electronically fabricate money by
buying bonds or stocks. They use
other tools like adjusting interest rate policy and currency agreements with
other central banks to pump liquidity into the financial system.
That dark money goes to the biggest private banks and
financial institutions first. From there, it spreads out in seemingly infinite
directions affecting different financial assets in different ways.
Dark money
is the #1 secret life force of today’s rigged financial markets. It drives
whole markets up and down. It’s the reason for today’s financial bubbles.
The
main difference between 2008 and now is that central bank sheets are
dramatically higher today. They just don’t have the room to accommodate nearly
as much easing this time around.
In the long run,
this is not sustainable. No one can say exactly when the next crisis will
arrive, but there are lots of signs it may be getting close.
In the meantime, you can take steps to prepare yourself by taking
profits and allocating money into cash or gold if signs of a
crisis grow stronger. By staying diversified in your portfolio and
watching stories like these you can be well prepared for market turmoil when it
arrives. While we aren’t there yet, I’ll be watching for signs of risks and
opportunities along the way.
…
SOURCE: https://www.zerohedge.com/news/2018-09-22/nomi-prins-10-years-later-debt-crisis-building-again
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"Volatility is always the
failure of medium... the crumpling of a reality we thought we knew to a
new truth. It is the moment where we learn that we are a fish living in a false
reality called water...This is all you need to know to understand when the volatility storm will truly come..."
See the Figure at the beginning of this art: very creative
What Is Water In Markets?
Volatility and the Fragility of the Medium
There are these two young
fish swimming along, and they happen to meet an older fish swimming
the other way, who nods at them and says, “Morning, boys, how's the water?” And the two young fish swim on
for a bit, and then eventually one of them looks over at the other and goes, “What the hell is
water?”.
-David Foster Wallace, This is
Water (2005)
“This is
Water” is the title of a commencement speech delivered by David
Foster Wallace that has become a masterpiece of meta-thinking. If you haven’t listened to it, put down this
paper and do so now. It is worth 20 minutes of your life.
Listen this tape:
The Foster Wallace parable of two
young fish ignorant of the medium that defines their reality is so
important on many levels. Foster Wallace contends that we
swim in a world defined by self-centered thoughts, that serve to make
reality visible, but should never be mistaken as fundamental truth.
Volatility is always
the failure of medium...
This is all you need to know to understand when the volatility storm
will truly come. It is not about valuations, money printing, or where the VIX
is at any point. When the collective consciousness stops believing growth can
be created by money and debt expansion the entire medium will fall apart
violently, otherwise it will continue to be real. The belief that the medium is
the reality is what holds the edifice together temporally.
This letter is divided into
three key themes: The first part will discuss fragility of the market medium;
the second will discuss how the volatility in February was a
symptom of a much greater
liquidity problem; and the third will discuss how flows are more important than fundamentals when the
medium dominates truth.
Out of the fishbowl and down the drain we go...
See figure again:
Now, go to these subtitles:
Part 1: Fragility in the Medium
See Chart1: Value vs Momentum:
See Chart 2: Passive Investment effect on Volatility &
Excess return (alpha)
Two key themes emerge when the market is dominated by passive investing
as seen above:
1) “Excess Return”
or Alpha available to active managers is diminished (blue line in graphic)
2) Volatility is
amplified. (black line in graphic)
A good
metaphor is to think of passive investors as a drunk man at the bar and active
investors as his sober guide.
See picture:
The irony of the Bogle-head crowd is that they tout
efficient market hypothesis to support passive investing while simultaneously
failing to comprehend how the dominance of the strategy causes markets to
become highly unstable and inefficient. The most immediate
realities are the ones that are the hardest to see… If you want to know when
volatility will truly arrive, watch the shift in the medium.
….
SOURCE:
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
Showing
contempt for the constitution and Laws doesn’t matter if the intention is to
avoid that Kavanaugh be nominated as Judge of the Supreme Court. His nomination
will change the balance of power in this Institution and the legality of any
decision emanated from the White House, specially the attempt to impeach him, may
be discarded. The point is that
Trump has the authority to nominate the next Judge of the Supreme Court and any
blasphemy against the Law will be treated as such and those who are creating
this legal mess now will go to jail. So far, two stupid
ladies are been used in that purpose. They do not have consistent evidence (the
1st happens 3 decades ago) and they deserve to go to jail. It does
not matter the political color of Kavanough (he was a Bush’s neoconservative
cadre). That is not legal reason to stop the nomination of Kavanough, it will
happen on Monday or Tuesday and bye bye to this chaos.
…
"I
wasn’t going to touch a penis until
I was married"
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Trump needs more propaganda like this one but:
Roughly 61%
of Republican voters say
they're
very interested in voting on Nov. 6...
[[ To
make it effective.. they have to add PEACE: take out our troops from
Syria asap.. they are going to be bombed.. and accused of terrorist allies..
then..bye bye Trump ]]
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US-WW ISSUES (Geo Econ, Geo Pol
& global Wars)
Global depression is on…China, RU, Iran search for State
socialis+K-, D rest in limbo
Wishful thinking.. we should not trust -whatever our paid press- said on China
“The short-Hong Kong dollar carry trade has come to an end..."
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The best China can do is down-play the US threats .. that is a gangsters’ policy
FUTURES,
YUAN SLUMP AT OPEN AFTER CHINA CANCELS US TRADE TALKS false
propaganda
Having
rallied 800 points last week on hopes that US-China trade tensions were on a
path to de-escalation, Dow futures are opening down just 100 points (and Yuan
is lower) after China escalated and canceled two planned
trade talk visits.
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"Before pointing the finger at Russia and Syria,
the U.S. should answer for its own
record ..."
[[ The war in Syria is
going to end soon.. as soon as the Turkish troops are convinced to get out of
the zones in dispute.. if they don’t, they will be also considered as terrorist
and bombed without clemency.. the main target are the US-Saudis and Israel
troops inside (and French if they have it). The US knows this will happen and they will receive a
final note few hours before the attack.. If the stay, our soldiers will be
treated as terrorist invaders.. If the US use NATO, RU-Chi will wipe out their
main stations, if US insist on terrorism and attack RU-China.. WW3 will start.. US will be bombed up to
rendition & we will know what it means Hiroshima & NAgazaki 1k time
high.. and bye bye to the piracy of
sanctions and nuke blackmail. This may happens soon They know the US strategy
and RU-Chi-allies will proceed. So, is time to negotiate peace.. the one who
win the battle for peace, will win the war. ]]
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"We don't have any
defense that could deny the employment of such a weapon against
us..."
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Perhaps the
Brits are also concerned since much of the espionage performed on the Trump
campaign was conducted on UK
soil.
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The naval medical ship, known as the
"Peace Ark," had moored on Saturday at the port of La Guaira near the
Venezuelan capital.
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO
..Focus on neoliberal expansion via wars & danger of WW3
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RELATED 1
Subtitle : The trade war
between China and the United States began on July 6, when
the reciprocal customs duties between these states entered
into force.
…
RELATED 2
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Los uries
from Sw quieren inflarle la Pelotas a los chinos sabiendo que son de acero
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Every nationality must create their own Banks.. Why not? Money don’t have sex–gender. When the sweds
talk on “'Sharia Banks” they only unfold their islamphobia, that’s un ethical
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UK Media Claims Royal Navy Didn't Send Subs
to Hit Syria Due to Lack of Assets
They’re afraid of London & military compounds be bombed if WW3
start.. just take out your mercen from Syr
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Hong
Kong Government Bans Pro-Independence Political Party HK Govt don’t like CIA?
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His ex-classmate
at Yale Univer Deborah Ramirez, may need more money.
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RT SHOWS
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes &
terrorist imperial chaos
US: Diez años de crisis Diez años mal contad y que cuentan mucho
US Salarios de esclavos No hay justicia para presos que apagan
incen
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PRESS TV
Resume of Global News described by Iranian observers..
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Programs Iran
terror attack
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