Wednesday, August 31, 2016

Today's links

Today's quote:  "...We were not strong enough to drive out a half-million American troops, but that wasn't our aim. Our intention was to break the will of the American Government to continue the war. Westmoreland was wrong to expect that his superior firepower would grind us down. If we had focused on the balance of forces, we would have been defeated in two hours. We were waging a people's war..."  General Vo Nguyen Giap, the Vietnamese Communist commander

1--Bill Gross: The Fed has "mastered the art of market manipulation "

---I and others however, have for several years now, suggested that the primary problem lies with zero/negative interest rates; that not only do they fail to provide an “easing cushion” should recession come knocking at the door, but they destroy capitalism’s business models – those dependent on a yield curve spread or an interest rate that permits a legitimate return on saving, as opposed to an incentive for spending. They also keep zombie corporations alive and inhibit Schumpeter’s “creative destruction” which many argue is the hallmark of capitalism. Capitalism, almost commonsensically, cannot function well at the zero bound or with a minus sign as a yield. $11 trillion of negative yielding bonds are not assets – they are liabilities. Factor that, Ms. Yellen into your asset price objective. You and your contemporaries have flipped $11 trillion from the left side to the right side of the global balance sheet. In the process, you have deferred long-term pain for the benefit of short-term gain and the hopes that your ancient model renormalizes the economy over the next few years. It likely will not. Japan is the petri dish example for the past 15 years. Other developed market economies since Lehman/2009 are experiencing a similar fungus.
Investors should know that they are treading on thin ice. The problem with Cassandras, such as Gross and Jim Grant and Stanley Druckenmiller, among a host of others, is that we/they can be compared to a broken watch that is right twice a day but wrong for the other 1,438 minutes. But believe me: This watch is ticking because of high global debt and out-of-date monetary/fiscal policies that hurt rather than heal real economies. Sooner rather than later, Yellen’s smooth shot from the fairway will find the deep rough.

2--Stan Druckenmiller's "Horrific Sense" Of Deja Vu: "I Know It's Tempting To Invest, But This Will End Very Badly" (archive) important

3--“If You Own a Home in Palo Alto, CA, Sell it Now”

4--Turkish FM talks ‘Euphrates Shield’ with Russian counterpart

5--Gülen movement ‘founded by CIA like the Mormons and Scientologists,’ says Turkish prosecutor

“Investigative journalists have been reporting that [Gülenists] worked as contractors for foreign intelligence services such as the CIA, MI6 and BND and infiltrated into the intelligence services of other countries acting in the name of the services they worked for,” read the indictment.

It noted that the mysterious killings of journalists Necip Hablemitoğlu, Haydar Meriç and Aytunç Altındal, who wrote books on the issue, should be “carefully investigated.” 

6--Will Washington sabotage China's OBOR Eurasia integration masterplan??

China has proposed OBOR; a pan-Eurasian connectivity spectacular designed to configure a hypermarket at least 10 times the size of the US market within the next two decades. The US hyperpower – not the Atlanticist West, because Europe is mired in fear and stagnation — “proposes” the current neocon/neoliberalcon status quo; the usual Divide and Rule tactics; and the primacy of fear, enshrined in the Pentagon array of “threats” that must be fought, from Russia and China to Iran. The geopolitical rumble in the background high-tech jungle is all about the “containment” of top G20 members Russia and China....

An array of Silk Road projects now crisscross Eurasia, progressively networking east-west and north-south corridors through many an economic zone; an expanding connectivity and infrastructure development frenzy involving Russia, China, India, Pakistan, Iran, Southeast and Central Asia. Connectivity, now more than geography, is destiny....

At the G20 China once again is announcing it is taking the lead. And not only taking the lead – but also planning to overstretch its abilities to make the hyper-ambitious OBOR Eurasia integration masterplan work. Call it a monster PR exercise or a soft power win-win; the fact that humanitarian imperialism as embodied by the Pentagon considers China a major “threat” is all the Global South – and the G20 for that matter — needs to know. 

7--Made in America: State Dept. Offers $3Mln For Daesh Leader Trained in US

The US State Department has offered a $3 million reward for any information leading to the arrest of Gulmurod Khalimov, a former Tajik police commander who is currently one of the main leaders of the Daesh terrorist group. While the press release labels him as a terrorist, it fails to mention that it was the US who actually trained him...

In 2003, I went to Baton Rouge in Louisiana, to undergo special training with the US Special Forces,” the man says. “In 2008, I also underwent special training, again at Baton Rouge,” he continues. “From 2003 to 2008, I had special training in America at a Blackwater military base,” he further reveals, adding that there they were trained to fight against Muslims and Islam. Back in 2015, RT news channel contacted the US institutions involved in his training for information. The US training organization The Academy, which is the current owner of the facilities where Khalimov was taught, answered that they did everything “with the explicit approval of the appropriate US Government department or agency.”

8--Obama success story: Third biggest stock market boom since 1900; Obama gave away the farm to enrich his Wall Street masters

The Obama years have been among the best of times to be a stock investor, going all the way back to the dawn of the 20th century.” He notes that someone who bought a low-cost stock index fund at the beginning of Obama’s presidency would have seen the value of the investment triple as of today.

Obama has overseen the third best run for stock market investors since 1900, Sommer writes. The market performed better only under the presidencies of Republican Calvin Coolidge in the 1920s, during the speculative boom that led to the Great Depression, and Democrat Bill Clinton, who presided over the era of “irrational exuberance” on financial markets and the tech bubble. Under Obama, the stock market performed better than under pro-business Republican presidents such as Ronald Reagan, Dwight Eisenhower and George H.W. Bush.

The current bull market is the outcome of deliberate policies undertaken by Obama in the wake of the 2008 financial crash to save the banks at the expense of the vast majority of the population, beginning with the bailout of major financial institutions....

The US Federal Reserve lowered its benchmark interest rate to near zero and adopted the policy of “quantitative easing” to pump trillions of dollars into the financial markets. Obama’s reappointment of Ben Bernanke in 2009 and his appointment of Janet Yellen as Bernanke’s successor in 2013 were decisions to support the continuation of this policy.

This gave rise to a massive boom in speculation that has greatly exacerbated the growth of social inequality. The wealth of the 400 richest individuals in the US skyrocketed from $1.27 trillion in 2009 to $2.34 trillion last year.

Share prices have soared to record heights, but have virtually no correlation with the stagnating real economy outside the world of finance. Economic growth for the remainder of 2016 and next year is estimated to be at 2 percent, far lower than after previous recessions. Meanwhile, median household income has fallen by 7 percent since 2000 and labor’s share of total income has dropped from 66 percent to 61 percent....

In March of 2009, the Obama administration carried out a number of measures to steady the nerves of America’s financial aristocracy and restore confidence on Wall Street. After the House of Representatives passed a bill to tax some bonuses at a handful of companies that had received government bailout money, following an explosion of public anger over the announcement of $165 million in executive bonuses by the bailed-out insurance giant American International Group (AIG), Obama moved to block passage of a similar bill by the Senate.

That same month, the administration announced a “private-public partnership” to offload the banks’ bad mortgage assets at public expense. Merely days later, Obama announced plans to “fundamentally restructure” the US auto industry while forcing brutal wage and benefit concessions on auto workers as a condition for any further loans to General Motors and Chrysler. The restructuring of the auto industry signaled a broader assault on the working class as a whole.

It was after the implementation of these policies that the stock market began its record-breaking ascent.

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