Wall Street Panic

The Ponzi scheme teeters on the brink of total collapse, as "mainstream media" corporate whores and frauds desperately attempt to put lipstick on a dying pig  

STRATEGIC CULTURE FOUNDATION
By Mike Whitney
08/25/2015

“Not only is the equity market at the second most overvalued point in U.S. history, it is also more leveraged against probable long-term corporate cash flows than at any previous point in history.”

— John P. Hussman, Ph.D. “Debt-Financed Buybacks Have Quietly Placed Investors On Margin“, Hussman Funds

“This year feels like the last days of Pompeii: everyone is wondering when the volcano will erupt.”

— Senior banker commenting to the Financial Times

Last Friday’s stock market bloodbath was the worst one-day crash since 2008. The Dow Jones dropped 531 points, while the S&P 500 fell 64, and the tech-heavy Nasdaq slid 171. The Dow lost more than 1,000 points on the week dipping back into the red for the year. 

Panic strikes Wall Street criminals

At the same time, commodities continued to get hammered with oil prices briefly dropping below the critical $40 per barrel mark. More tellingly, the market’s so called “fear gauge” (VIX) skyrocketed to a 2015 high indicating more volatility to come. The VIX has remained at unusually low levels for a number of years as investors have grown more complacent figuring the Fed will intervene whenever stocks fall too far. But last week’s massacre cast doubts on the Central Bank’s intentions. Will the Fed ride to the rescue again or not? 

To the vast majority of institutional investors, who now base their buying decisions on Fed policy rather than market fundamentals, that is the crucial question.

Ostensibly, last week’s selloff was triggered by China’s unexpected decision to devalue its currency, the juan. The announcement confirmed that the world’s second biggest economy is rapidly cooling off increasing the likelihood of a global slowdown. Over the last decade, China has accounted “for a third of the expansion in the global economy,… almost double the contribution of the US and more than triple the impacts of Europe and Japan.” Fears of a slowdown were greatly intensified on Friday when a survey showed that manufacturing in China shrank at the fastest pace since the recession in 2009. That’s all it took to put the global markets into a nosedive. According to the World Socialist Web Site:

“The deceleration of growth in China, reflected in figures on production, exports and imports, business investment and producer prices, is fueling a near-collapse in so-called “emerging market” economies that depend on the Chinese market for exports of raw materials. The past week saw a further plunge in stock prices and currency rates in Russia, Turkey, Brazil, South Africa and other countries. These economies are being hit by a massive outflow of capital, placing in doubt their ability to meet debt obligations.”

(“Panic sell-off on world financial markets”, World Socialist Web Site)

While a correction was not entirely unexpected following a 6-year long bull market, the sudden drop in equities does have analysts rethinking the effectiveness of the Fed’s monetary policies which have had little impact on personal consumption, retail spending, wages, productivity, household income, or economic growth all of which remain weaker than they have been following any recession in the post war era. For all intents and purposes, the plan to inflate asset prices by dropping rates to zero and injecting trillions in liquidity into the financial system has been an abject failure. GDP continues to hover at an abysmal 1.5% while signs of a strong, self sustaining recovery are nowhere to be seen. At the same time, government and corporate debt continue to balloon at a near-record pace draining capital away from productive investments that could lay the groundwork for higher employment and stronger growth.

What’s so odd about last week’s market action is that the bad news on China put shares into a tailspin instead of sending them into the stratosphere which has been the pattern for the last four years. In fact, the reason volatility has stayed so low and investors have grown so complacent is because every announcement of bad economic data has been followed by cheery promises from the Fed to keep the easy-money sluicegates open until the storm passes. That hasn’t been the case this time, in fact, Fed chair Janet Yellen hasn’t even scrapped the idea of jacking up rates some time in September which is almost unthinkable given last week’s market ructions.

Why? What’s changed? Surely, Yellen isn’t going to sit back and let six years of stock market gains be wiped out in a few sessions, is she? Or is there something we’re missing here that is beyond the Fed’s powers to change? Is that it?

My own feeling is that China is not the real issue. Yes, it is the catalyst for the selloff, but the real problem is in the credit markets where the spreads on high yield bonds continue to widen relative to US Treasuries.

What does that mean?

It means the price of capital is going up, and when the price of capital goes up, it costs more for businesses to borrow. And when it costs more for businesses to borrow, they reduce their borrowing, which decreases the demand for credit. And when the demand for credit decreases in a credit-based system, then there’s a corresponding slowdown in business investment which impacts stock prices and growth. And that is particularly significant now, since the bulk of corporate investment is being diverted into stock buybacks. Check out this excerpt from a post at Wall Street on Parade:

“According to data from Bloomberg, corporations have issued a stunning $9.3 trillion in bonds since the beginning of 2009. The major beneficiary of this debt binge has been the stock market rather than investment in modernizing the plant, equipment or new hires to make the company more competitive for the future. Bond proceeds frequently ended up buying back shares or boosting dividends, thus elevating the stock market on the back of heavier debt levels on corporate balance sheets.

Fox "News" financial clown Neil Cavuto attempts to put a happy face on the apocalypse - while moving his own investments into gold 

Now, with commodity prices resuming their plunge and currency wars spreading, concerns of financial contagion are back in the markets and spreads on corporate bonds versus safer, more liquid instruments like U.S. Treasury notes, are widening in a fashion similar to the warning signs heading into the 2008 crash. The $2.2 trillion junk bond market (high-yield) as well as the investment grade market have seen spreads widen as outflows from Exchange Traded Funds (ETFs) and bond funds pick up steam.” (“Keep Your Eye on Junk Bonds: They’re Starting to Behave Like ‘08 “, Wall Street on Parade).

As you can see, the nation’s corporations don’t borrow at zero rates from the Fed. They borrow at market rates in the bond market, and those rates are gradually inching up. And while that hasn’t slowed the stock buyback craze so far, the clock is quickly running out. We are fast approaching the point where debt servicing, shrinking revenues, too much leverage, and higher rates will no longer make stock repurchases a sensible option, at which point stocks are going to fall off a cliff. Here’s more from Andrew Ross Sorkin at the New York Times:

“Since 2004, companies have spent nearly $7 trillion purchasing their own stock — often at inflated prices, according to data from Mustafa Erdem Sakinc of the Academic-Industry Research Network. That amounts to about 54 percent of all profits from Standard & Poor’s 500-stock index companies between 2003 and 2012, according to William Lazonick, a professor of economics at the University of Massachusetts Lowell.”

You can see the game that’s being played here. Mom and Pop investors are getting fleeced again. They’ve been lending trillions of dollars to corporate CEOs (via bond purchases) who’ve taken the money, split it up among themselves and their wealthy shareholder buddies, (through buybacks and dividends neither of which add a thing to a company’s productive capacity) and made out like bandits. This, in essence, is how stock buybacks work. 

NYT frauds spout ludicrous lies about market

"correction" that was "expected"

Ordinary working people stick their life savings into bonds (because they were told “Stocks are risky, but bonds are safe”.) that offer a slightly better return than ultra-safe, low-yield government debt (US Treasuries) and, in doing so, provide lavish rewards for scheming executives who use it to shower themselves and their cutthroat shareholders with windfall profits that will never be repaid. When analysts talk about “liquidity issues” in the bond market, what they really mean is that they’ve already divvied up the money between themselves and you’ll be lucky if you ever see a dime of it back. Sound familiar?

Of course, it does. The same thing happened before the Crash of ’08. Now we are reaching the end of the credit cycle which could produce the same result. According to one analyst:

“There’s been worrying deterioration in the overall global demand picture with the continuation of EM (Emerging Markets) FX (Currency Markets) onslaught, deterioration in credit metrics with rising leverage in the US as well as outflows in credit funds in conjunction with significant widening in credit spreads…..The goldilocks period of “low rates volatility-stable carry trade environment of the last couple of years is likely coming to an end.”

(“Credit: Magical Thinking“, Macronomics)

CNN deviant drug addict fraud Richard Quest serves up a gigantic portion of shit pie to investors, replete with pleasing platitudes and assurances that catastrophe is "only a temporary blip" 

In other words, the good times are behind us while hard times are just ahead. And while the end of the credit cycle doesn’t always signal a stock market crash, the massive buildup of leverage in unproductive financial assets like buybacks suggest that equities are in line for a serious whooping. Here’s more from Bloomberg:

“Credit traders have an uncanny knack for sounding alarm bells well before stocks realize there’s a problem. This time may be no different. Investors yanked $1.1 billion from U.S. investment-grade bond funds last week, the biggest withdrawal since 2013, according to data compiled by Wells Fargo & Co…..

“Credit is the warning signal that everyone’s been looking for,” said Jim Bianco, founder of Bianco Research LLC in Chicago. “That is something that’s been a very good leading indicator for the past 15 years.”

Bond buyers are less interested in piling into notes that yield a historically low 3.4 percent at a time when companies are increasingly using the proceeds for acquisitions, share buybacks and dividend payments. Also, the Federal Reserve is moving to raise interest rates for the first time since 2006, possibly as soon as next month, ending an era of unprecedented easy-money policies that have suppressed borrowing costs….

“Unlike the credit market, the equity market well into 2008 was very complacent about the subprime crisis that led to a full blown financial crisis,” the analysts wrote…..

Fox "News" whore Gretchen Carlson once

again spreads her legs for corporate masters

in failed attempt to bullshit investors

So if you’re very excited about buying stocks right now, just beware of the credit traders out there who are sending some pretty big warning signs.” (“U.S. Credit Traders Send Warning Signal to Rest of World Markets”, Bloomberg)

It’s worth noting that the above article was written on August 14, a week before the stock market blew up. 

But credit was “flashing red” long before stock traders ever took notice.

But that’s beside the point. Whether the troubles started with China or the credit markets, probably doesn’t matter. 

What matters is that the system about to be put-to-the-test once again because the appropriate safeguards haven’t been put in place, because bubbles are unwinding, and because the policymakers who were supposed to monitor and regulate the system decided that they were more interested in shifting wealth to their voracious colleagues on Wall Street than building a strong foundation for a healthy economy. That’s why a simple correction could turn into something much worse.

Smart investors that got out early will soon be moving to cash in on the spoils of the crashed market

NOTE: As of posting time, Sunday night, the Nikkei Index is down 710, Shanghai down 296, HSI down 1,031. US equity futures are all deep in the red.

This news bureau contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

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Privatization Is At The Core Of Fascism

Criminal banksters, "elites," IMF terrorists, Congress and corporate criminals consolidate their death grip on the free world    

WASHINGTON'S BLOG
By Eric Zuesse
08/24/2015

Privatizations are increasingly fashionable, such as in Greece, Ukraine, the U.S., and UK — and privatizations are a central feature of fascism.

Greece now up for sale thanks to Nazi Merkel

and her lapdog Tsipras

The core of fascism is the idea that there is some elite, whether ‘Aryan’ or ‘chosen by God,’ or otherwise, who should run things, and that everyone else exists in order to serve that elite. Inevitably, this official elite consists of the people whom the powers-that-be assign as constituting the owners of almost everything that’s valuable. 

Increasingly, things become those people’s private possession — even what was formerly a public asset becomes now private. Beaches become private. Schools become private. Natural resources become private. 

It’s not just the art that was stolen by the Nazis and privatized to them and/or shown at museums that they control, which becomes private; it’s whatever the elite want to have, and to control: it’s all now private. That’s the fascist ideal. 

The legal system accommodates the legal owners, in any fascist nation, just as the legal system accommodates the legal owners in any nation at all. And, in fascism, the legal owners are the aristocracy, which are the people who have helped bring the system into being as it now is. 

Typically, they are the aristocracy that already exists in the given nation, if it was formerly a democracy (aristocrats tend to hate democracy; so, they bring into being fascism to replace it), but they can also be a group that is partially new and that is also partially composed of merely the winning segment of the old aristocracy — the segment of the old aristocracy that had won the type of intra-aristocratic conflict that always exists, within any aristocracy. Whereas any aristocracy is always at war against the public, there are also competitions within any aristocracy to determine which aristocrats will be the dominant ones. 

Any fascism is controlled by the nation’s aristocracy, and serves those people — not really the public, who receive nothing but propaganda from the aristocrats’ regime. Even in a dictatorship, not only in a democracy, the press or media are needed in order to sell the government’s policies to its public. If the press is privatized, it’s owned by members of the aristocracy. If the press is owned directly by the government, it still is propaganda. The great majority of the public have no way around propaganda. If aristocrats are in control, few people will even know that that’s the case.

CNN deviants, drug addicts, frauds and corporate hacks led the charge for the ECB terrorists, IMF, Merkel first in the destabilisation and then dismemberment of Greece

Privatization thus replaces public, government-owned, assets, by privately owned assets, and so it transfers control from publicly elected (government) leaders (who are answerable to everyone at ballot-boxes), to private ones — to private stockholders who decide how those assets will be used — regardless of whether the asset happens to be schools, or hospitals, or land, or natural resources, or roads, or whatever. Anything can be privatized. Anything can be run by an elite, by an ‘owner.’ Fascism tries to maximize that: private ownership of what was formerly public property.

Consequently, the first group of privatizations occurred in the first fascist nation, Italy, in the 1920s; and the second group of privatizations occurred in the second fascist nation, Germany, in the 1930s. Privatizations started under Mussolini, and then were instituted under Hitler. That got the fascist ball rolling; and, after a few decades of hiatus in the wake of fascism’s embarrassing supposed defeat in WW II, it resurfaced and then surged yet again after 1970, when fascist forces in the global aristocracy, such as via the CIA, IMF, Bilderberg group, and Trilateral Commission, imposed the global reign of the world’s main private holders of bonds and of stocks: the world’s aristocrats are taking on an increasing percentage of what were previously public assets.

Privatizations, after starting in fascisms during the pre-WWII years, resumed again in the 1970s under the fascist Chilean leader Augusto Pinochet; and in the 1980s under the fascist British leader Margaret Thatcher (a passionate supporter of apartheid in South Africa) and also under the smiling fascist American leader Ronald Reagan (who followed the prior success of Richard Nixon’s “Southern Strategy” of White domination in the by-then resurgent-conservative U.S., and might even be said to have been America’s first fully fascist President); and in the 1990s under several fascist (formerly communist) leaders throughout the former Soviet Union, under the guidance of Harvard University’s fascist economics department, which transferred control from the former nomenklatura, to the new (Western-dependent) “oligarchs.”

And, privatizations are now all the rage throughout the world, such as in today’s fascist United States, and today’s fascist United Kingdom.

Mussolini with Hitler

Mussolini was the man-of-the-future, but — after Franklin Delano Roosevelt died, and finally Thatcher and Reagan and other ‘free-marketeers’ came into office — Mussolini’s “future” has increasingly become our own “now”: the Axis Powers’ ideology has actually been winning in the post-WW-II world. Only, this time, it’s called instead by such names as “libertarianism” or “neo-liberalism,” no longer “fascism,” so that only the true-believing fascists, the aristocrats, will even know that it’s actually fascism. 

It’s their Big Con. It’s their Big Lie. Just renaming fascism as “libertarianism” or “neo-liberalism,” has fooled the masses to think that it’s pro-democratic. “Capitalism” has thus come to be re-defined to refer to only the aristocratically controlled form of capitalism: fascism. The ideological battle has thus apparently been won by a cheap terminological deceit. That’s all it takes for dictatorship to be able to win.

Reagan with Thatcher 

The democratically controlled form of capitalism, such as in some northern European countries, has commonly been called “socialism”; and, of course, it’s opposed to all forms of dictatorship, both communist and fascist. 

Socialism is the democratic form of capitalism. It’s the form of capitalism that serves the public, instead of the aristocracy, at any point where the two have conflicting interests. It subordinates the aristocracy to the public. Fascism instead subordinates the public to the aristocracy, which is the natural tendency (because the “World’s Richest 0.7% Own 13.67 Times as Much as World’s Poorest 68.7%,” and the “World’s Richest 80 People Own Same Amount as World’s Bottom 50%”). 

Thus, recognizing those just-linked-to shocking realities, the basic decisions for the future of the world can actually be made by perhaps as few as only a hundred or so people, whose representatives at forums such as Bilderberg can coordinate things in private, and so can provide a sort of global supra-government, with those representatives serving as ministers to their principals, who, of course, will then carry out the details of whatever has been agreed upon between their agents, on their behalf. 

Payments then can be made in the normal way, between their respective corporations, and this arrangement can include payments to lobbying firms, etc., as well as to media companies, for advertisements, both of a commercial, and of a political, nature, in order to keep everything in line with the mutually-agreed-upon global-aristocratic plan.

Within recent decades, the international aristocracy, with America’s in the lead, has, in fact, set into motion a plan to privatize an emerging world government, so as to prevent it from being democratic: instead of socialist, this would be a fascist world government. Its origins can even be found in the writings by Mussolini himself. (If he might be said to have had a “Plan ‘B’,” then this could have been his, and the plan’s ultimate adoption seems now to be only a matter of time. The present informal fascist system, via Bilderberg meetings etc., as was just summarized, would then operate only around the fringes of that more formal system, which would destroy national sovereignty and any trace of democracy, regarding many currently governmental matters, such as regulating the environment and product-safety. In a sense: virtually the whole world would then be a prison containing the public, and only aristocrats would have keys to unlock it, if and when and where they wish to let someone out into their tiny luxurious free world.)

Mussolini, incidentally, did not create fascism; he learnt it from his personal teacher, Vilfredo Pareto, who was one of the founders of the microeconomic theory that exists to this day and that is intrinsic to all cost/benefit analyses in capitalist economics. (It’s actually fascist economics, neither socialist nor communist economics. No microeconomic theory for a democracy — no socialist microeconomics — has yet been put forth, or else none has survived that was.) Aristocrats liked Pareto’s theory, so it became embodied in what’s called “welfare economics,” which is designed to fit with his political theory, which is fascism. Pareto was even rightly called “the Karl Marx of fascism.” For example: According to Pareto, freeing a slave from his or her master would be wrong unless the master accepts it as part of a transaction in which the slave is being sold and the master is satisfied with the payment that is being offered in the transaction. If the master isn’t satisfied, then the transaction would be “inefficient,” in the terminology of fascist microeconomic theory, which is the foundation of the existing type of capitalist economics — the type of economics that is being taught around the world.

America’s President Abraham Lincoln was one of the first people to advocate coherently for socialism. Whereas, to Pareto, property came first; to Lincoln, persons came first. To Pareto, property-rights were supreme. To Lincoln, human rights came first.

Lincoln was tragically shot by a conservative, and the political Party that he had helped to found (the Republican Party) was then quickly taken over by America’s aristocrats (and it, too, is described at that last link, making clear that Lincoln would have despised the Republican Party that followed after him; he would repudiate it).

Although the America of today is opposed to socialism, America’s two greatest Presidents, Lincoln and Franklin Delano Roosevelt, were both socialists: they both placed human rights above any property rights; they both favored democratic capitalism. Unlike FDR, Lincoln existed before fascism did; so, in his era, the equivalent was feudalism, and he was determined to end that in the U.S. South — thus, the Civil War.

Even an ordinary American scholar has argued that both Lincoln and FDR were “socialist,” and in the case of Lincoln he lists the actions this President took, as being the reasons for calling him a “socialist.” Lincoln wasn’t merely a pioneering socialist; he was, indeed, a very bold one.

America did not become fascist until recent decades. At the end of an analysis of polling-data in 2012, I had concluded: “The danger of outright fascism coming soon in Washington is real – the culmination of Reagan’s rightward thrust. It’s shown not just in the polling data, but in each day’s news, especially when viewed in the light of history. Everyone should be made aware of it.” But now I would say: We are already there.

And the last U.S. President before Ronald Reagan, which was Jimmy Carter, has recently said in a startling outburst of honesty, reflecting upon what has happened to the United States after he left office:

"Now it’s just an oligarchy with unlimited political bribery being the essence of getting the nominations for president or being elected president. And the same thing applies to governors, and U.S. Senators and congress members. So, now we’ve just seen a subversion of our political system as a payoff to major contributors, who want and expect, and sometimes get, favors for themselves after the election is over."

He just described fascism: the privatization of the government itself.

This news bureau contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

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30 Whales Die In Gulf Of Alaska - Federal Probe Launched

Feds can start at Fukushima and work their way over 

CBC NEWS
By Ken Larsen
08/21/2015

The large number of dead whales appearing along the coast of British Columbia and Alaska since May is raising alarms among scientists.

Thirty dead whales have been detected in the Gulf of Alaska since May, representing a die-off more than three times the normal rate, according to the U.S. National Oceanic and Atmospheric Administration (NOAA). Another six dead stranded whales have been reported along B.C.'s north coast over the same time period, also a significant increase above annual seasonal numbers. 

Paul Cottrell, Pacific marine mammal co-ordinator with the Department of Fisheries and Oceans Canada, says his team is collaborating with U.S.officials to investigate the situation.

"We're working closely with NOAA to analyze samples," Cotrell said in a joint media teleconference, noting necropsy samples had been gathered from two dead humpbacks found in B.C. waters. 

The prevailing theory is that a large toxic algae bloom off the West Coast might be to blame. However, scientists have been unable to make a concrete connection. 

Only one sample, characterized as "less than ideal," has been analyzed to date. It came back negative for one strain of algae toxins. 

Gathering good samples has proven challenging. 

"Alaska has an awful lot of coastline and much of it is difficult to reach," said NOAA adviser Dr. Bree Witteveen. "We can't get to those carcasses more often than not." 

As well, field scientists have encountered "predator competition" while trying to gather samples, as witnessed by the news release photo showing seven large bears feeding on a fin whale carcass near Kodiak, Alaska.

Alaska Dispatch: The whale deaths may be tied to a larger marine pattern, officials said… managers are coping with several abnormalities in the Pacific… Thousands of starving sea lion pups [and] large numbers of seabirds have died… “each of these individual species that are examined are really important to us as we put the whole ecosystem picture together,” [NOAA's] Rowles said.

So far four whales species have been identified in what NOAA is characterizing as an "unusual mortality event": humpback, sperm, grey and fin. 

The public is asked to report any dead whale sightings, but should not approach or touch the animal.

In B.C. people can call the 24 hour Marine Mammal Incident hotline at 1-800-465-4336.

This news bureau contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

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