Sunday, March 13, 2016

Today's links

"People are just voting, finally, to destroy the establishment." Nassim Taleb

1--Everything but the kitchen sink: Draghi goes "all in"

“At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:


(1) The interest rate on the main refinancing operations of the Eurosystem will be decreased by 5 basis points to 0.00%, starting from the operation to be settled on 16 March 2016.


(2) The interest rate on the marginal lending facility will be decreased by 5 basis points to 0.25%, with effect from 16 March 2016.


(3) The interest rate on the deposit facility will be decreased by 10 basis points to -0.40%, with effect from 16 March 2016.


(4) The monthly purchases under the asset purchase programme will be expanded to €80 billion starting in April.


(5) Investment grade euro-denominated bonds issued by non-bank corporations established in the euro area will be included in the list of assets that are eligible for regular purchases.


(6) A new series of four targeted longer-term refinancing operations (TLTRO II), each with a maturity of four years, will be launched, starting in June 2016. Borrowing conditions in these operations can be as low as the interest rate on the deposit facility.”

2--Gaius Publius: When Trump Talks Trade, Voters Listen

No mention of Hillary?

The former politician, however, explained that Daesh (ISIL/ISIS) “has not come from the planet Mars.” It is an Iraqi organization. It has very few Syrians, even in Syria, in its ranks. It is an Iraqi organization “that has flourished on the back of the marginalization of the Sunnis in Iraq.”

“The government of Iraq and the people who support the government of Iraq – Iran and the US – have got to understand that al-Qaeda was brought to Iraq by the invasion of Iraq by the US,” he further explained.

“There were no good guys in the Syrian tragedy and I would also put a lot of blame on the outside forces: the forces, governments and others, who were supporting one side or the other,” he added

3--More borrowing needed to grow: QE over NIRP?

QE takes away the liquidity preference choice out of the hands of the consumers, and puts it into the hands of central bankers, who through asset purchases push up asset prices even if it does so by explicitly devaluing the currency of price measurement; it also means that the failure of NIRP is - by definition - a failure of central banking, and if and when the central bank backstop of any (make that all) asset class - i.e., Q.E., is pulled away, that asset (make that all) will crash. The only asset that does not have a central bank backstop (in fact, central banks are actively pushing it lower)? Gold.

4--The Fed caused 93% of the entire stock market's move since 2008: Analysis

He isolated each factor in a separate chart, calling them “eras” for the stock market.

  1. From after World War II until the mid-1970s, future GDP outlook explained 90% of the stock market’s move, according to statistical analysis by Barnier.

  2. GDP growth lost its sway on the market in the early 1970s with the rise of credit cards and consumer debt. Household liabilities grew with plastic first, followed by home mortgages, until the real estate crash of the early 1990s. Barnier’s analysis shows debt explained 95% of the entire market’s move during this time.

  3. The period between the mid- to late-1990s until 2000 was, of course, marked by the tech bubble. While stocks took much of the headline, that time also saw heightened activity in the commercial paper market. Startups and young companies sought cash beyond their stratospheric share values to fund their operations. Barnier’s regression analysis shows commercial paper increases could explain as much as 97% of the tech bubble.

  4. Shortly after the tech bubble burst, a housing bubble began, once more in the form of mortgages and other debt. That drove 94% of the market’s move for the first several years of the current century.

  5. As the financial crisis reached a fevered pitch in 2008, the Federal Reserve took to flooding the financial market with dollars by buying up bonds. Simultaneously, interest rates fell dramatically, as bond yields move in the opposite direction of bond prices. Barnier sees the Fed as responsible for over 93% of the market from the start of QE until today. During the first half of 2013, the Fed caused the entire market’s growth, he

Since the Fed stopped buying bonds in late 2014, the S&P 500 has been batted around in a 16% range and is more or less where it was when the QE came to a close. Investors need to anticipate the next driver, said Barnier.

“Quantitative easing has stopped, but now we're into the interest rate world,” he said. “That means for any investor trying to figure out what to do, step one is starting with a macro strategy.

5--Carter: "US no longer a democracy"

The New York Times front page on Sunday 2 August 2015 bannered, "Small Pool of Rich Donors Dominates Election Giving," and reported that:

A New York Times analysis of Federal Election Commission reports and Internal Revenue Service records shows that the fund-raising arms race has made most of the presidential hopefuls deeply dependent on a small pool of the richest Americans. The concentration of donors is greatest on the Republican side, according to the Times analysis, where consultants and lawyers have pushed more aggressively to exploit the looser fund-raising rules that have fueled the rise of super PACs. Just 130 or so families and their businesses provided more than half the money raised through June by Republican candidates and their super PACs."

The Times study shows that the Republican Party is overwhelmingly advantaged by the recent unleashing of big-corporate money power. All of the evidence suggests that though different aristocrats compete against each other for the biggest chunks of whatever the given nation has to offer, they all compete on the same side against the public, in order to lower the wages of their workers, and to lower the standards for consumers' safety and welfare so as to increase their own profits (transfer their costs and investment-losses onto others); and, so, now, the U.S. is soaring again toward Gilded Age economic inequality, perhaps to surpass the earlier era of unrestrained robber barons. And, the Times study shows: even in the Democratic Party, the mega-donations are going to only the most conservative (pro-corporate, anti-public) Democrats. Grass-roots politics could be vestigial, or even dead, in the new America.

6--Free Trade”: The Elites Are Selling It But The Public Is Longer Buying

7--Altered History (you tube) Elements of the national security state killed JFK in reaction to his foreign and military policy. Will they get rid of Trump the same way?

8--Violence, racism and the Trump campaign

American politics is taking on an ever more openly violent character—the product of nearly four decades of political reaction and war. Trump did not come out of nowhere. All the crimes, at home and abroad—torture, illegal invasions and occupations, drone assassination, police violence and domestic repression—have political consequences. In the 15 years of the so-called “war on terror,” permanent war has become a basic feature of American life. Militarism abroad and social reaction at home, marked above all by unprecedented levels of economic inequality, have generated increasing state violence.

This has been presided over by both parties of big business. The Republican Party has specialized in promoting every form of ideological backwardness. The Democratic Party, while carrying out the same basic policies as the Republicans, has promoted identity politics based on race, gender and sexual orientation to obscure the fundamental class divide in society, sow divisions within the working class and block the emergence of an independent political movement of working people.

Now, the entire political system is beset by a deep crisis of legitimacy. Masses of people are alienated and disgusted with both parties. This takes an initial, though distorted left-wing form in the broad support for the campaign of Sanders, who calls himself a socialist, and a right-wing form in the support for Trump.

Whatever the outcome of the primary process, which remains uncertain in both big-business parties, the official US two-party system is headed for unprecedented political upheavals. There is a powerful class dynamic at work. Both corporate-controlled parties are moving to the right, while broad masses of working people and youth are moving to the left.

9--Wall Street's wise men (and women) rap Trump

10--Syrian War Could Have Ended in 2012 if West Had Listened to Russia

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