iii)Bitcoin slides again as Jamie Dimon doubles down again on cryptocurrency concerns.

( zerohedge)

end

Two articles for you to read

the first one by Macleod is a must read.  He states that we are now entering the expansionary phase of the credit cycle and the area that will be most effected will by Europe and rising rates will bring down the entire European banking sector

(courtesy Macleod/Goldmoney)

and Hugo Salinas Price on the new Yuan petro dollar which will cause gold to rise

(Hugo Salinas Price)

Macleod on the next crisis, Salinas Price on gold’s prospects

The global economy is now in an expansionary phase, with bank credit being increasingly available for non-financial borrowers. This is always the prelude to the crisis phase of the credit cycle.

Most national economies are directly boosted by China, the important exception being America. This is confirmed by dollar weakness, which is expected to continue. The likely trigger for the crisis will be from the Eurozone, where the shift in monetary policy and the collapse in bond prices will be greatest. Importantly, we can put a tentative date on the crisis phase in the middle to second half of 2018, or early 2019 at the latest.

Introduction

Ever since the last credit crisis in 2007/8, the next crisis has been anticipated by investors. First, it was the inflationary consequences of zero interest rates and quantitative easing, morphing into negative rates in the Eurozone and Japan. Extreme monetary policies surely indicated an economic and financial crisis was just waiting to happen. Then the Eurozone started a series of crises, the first of several Greek ones, the Cyprus bail-in, then Spain, Portugal and Italy. Any of these could have collapsed the world’s financial order.

But Mario Draghi steadied the sinking Eurozone banking system by promising to do whatever it takes. We derided him, but he has succeeded. The intention of zero interest rates and QE was to prevent a slide into deflation, a spiral of collapsing bank credit and asset values. Markets steadied. It was intended to restore private sector wealth by inflating asset prices. It enriched the hard-pressed financial sector, with bond and stock markets not only recovering, but going on to record levels. A sense of wealth has returned to the portfolio-owning classes. The DAX has risen over 225% and the S&P 500 nearly 250%. Inflation, by which commentators mean the rate of increase in consumer prices, has not yet reflected the massive injection of monetary inflation from the time of the crisis. At least, not on official CPI figures.

If there is a lesson for us all since the great financial crisis, it is that central banks, even though dealt an appalling hand, are very good at managing local systemic problems, real or imagined. Bearish hedge fund managers, those masters of the universe, are throwing in the towel. Valuations, according to their models, cannot be explained, let alone justified.

In truth, these investors have made the same mistake every cycle. They see the bubbles, but fail to fully understand their source. They think bubbles are solely the result of the madness of crowds, irrational bullishness ignoring fundamentals. They fail to dig a little deeper and understand the source is a repeating credit cycle. Only when you understand that financial bubbles are merely visible symptoms, can you begin to understand the underlying disease.

The global credit cycle is in a new expansionary phase, which can be expected to change market characteristics. Only now are we sufficiently advanced in the global credit cycle to speculate about its evolution into crisis. This article takes the reader through the likely manifestations of it, providing a road map for reference of its progress, and where and when it is likely to hit first.

Credit cycle recap

During a credit crisis, the expansion of the money quantity at the behest of the central bank is aimed at saving the banks. Otherwise, banks, which are highly-leveraged financially, would simply collapse under a combination of their customers’ bad debts and falling collateral values.

Assuming monetary policy rescues the banks from the crisis, the financial system becomes stabilised, the crisis is over, and we move into a second phase of recovery. Unemployment starts being cyclically high, and price inflation remains subdued. The banks are still traumatised, expanding credit only to the government and their largest low-risk customers. On the back of improving bond prices, they begin to expand credit towards their own and associated financial activities, remaining cautious over lending to the medium and smaller business sectors (SMEs), which between them form the bulk of non-financial economic activity. This recovery from the crisis is prolonged by government intervention, which generally seeks to prevent malinvestments being liquidated, freeing up capital to be used more productively.

As time goes on, the banks begin to grow confident that the crisis has passed, and memories of it fade. They gradually extend their lending to SMEs, which represents the silent majority of the non-financial economy. We have now entered the expansionary third phase, where banks increasingly compete for what they have now decided is low-risk business. The second half of the expansionary phase is characterised by low unemployment, growing skill shortages, and rising price inflation. Rising prices cheapen the real interest rate to a lower level than in the recovery phase, upsetting the balance between the expansion of credit and availability of capital and consumption goods even more. It is this that eventually forces the central bank to raise interest rates to the point where the next crisis phase is upon us. Central banks have no option but to address the falling purchasing power of the currency by raising interest rates sufficiently to stabilise it.

A debt crisis is triggered, because business models are undermined by rising financing costs. Companies collapse. In addition, the legacy of accumulated debt means high interest rates undermine the credit status of long-term debts and the asset values dependant on them, particularly of property. Government welfare costs rise and state finances deteriorate rapidly. As financial intermediaries, the banks are caught in the middle of the crisis, and being operationally geared, face bankruptcy. There comes that moment when even ordinary people wonder if they have lost everything.

That is why having triggered the crisis, central banks then rapidly change course and do everything, however financially unsound, to ensure the financial system survives and governments can continue to be financed.

Every credit cycle evolves on this approximate framework, but each has its specific characteristics. Progression from one phase to the other is often difficult to detect, and sometimes only obvious long after the event. But the repetition of crisis, recovery, expansion and crisis again is the structure of every credit cycle.

Over recent credit cycles, the magnitude of the crisis phase has increased, reflecting the enormous debt burden accumulating in the overall global economy. Since the financial reforms of the 1980s, there has been a new and growing element in the advanced economies: the expansion of credit aimed at financing consumption, which has now overtaken the application of credit aimed at production. This does not change the cycle framework, but it does alter its characteristics and visibility.

Global expansion is already here

The G20’s efforts to coordinate monetary policy globally have been undoubtedly successful. Unfortunately, they make credit expansion a truly international phenomenon, eventually feeding into a synchronised global credit cycle. International coordination of monetary policy increases the economic and price distortions for everyone, rolling up several smaller waves into one big tsunami. Furthermore, when the crisis hits one jurisdiction, the chances today are higher than before it will be transmitted to the others. So, we must consider this as a global experience, likely to be triggered from anywhere.

Investors based in Western capital markets often point the finger at China. We know that China’s massive credit expansion of recent years has already taken her into an expansionary phase. All the signs are there in plain sight, because the government is working to a predetermined published plan. The current five-year plan is intended to make China, in partnership with Russia, the dominant economic force on the Eurasian continent.

China is the most significant contributor to the current global credit expansion phase, benefiting all those that trade with her. Britain, a trading partner, has also been at full employment for some time. She has an open service-based economy, which permits it to expand in the direction of maximum opportunity. She is in the vanguard of providing services, technology and manufactured goods to China, and for all the other countries in Asia that are expanding with her. Germany is also expanding on the back of the Chinese story, but in her case principally as a supplier of capital goods. Japan, whose mighty corporations have factories throughout East Asia, is also doing well.

Commodity exporters round the world are similarly benefiting from Chinese demand for raw materials. Sub-Saharan Africa is now in China’s thrall, as is Australia and important South American countries. Canada and Mexico benefit. It is easier to list the countries not affected by China, so small is the number.

The expansionary phase of the credit cycle is all about how money is deployed. To make room for an increase in bank lending to non-financials, banks sell their low risk assets, predominantly short-term government bonds. Today, the consequential rise in government bond yields, an important indicator, remains suppressed by extreme monetary policy, and by the fact that large government deficits need to be financed at the lowest possible rates. Furthermore, different countries are expanding at vastly different rates, but they are all expanding on the back of bank credit becoming more widely available to the non-financial sector.

The sequence to look for ahead of the crisis

There is little doubt that the world is in the expansion phase of the credit cycle, with some economies responding better than others. China is driving the application of credit worldwide through her policies of infrastructure spending and economic progression. Her demand for capital goods and raw materials affects different countries in different ways, but China is the major global stimulant for credit demand in all her trading partners.

America is left out of this party, sitting it out in a grumpy mood. She frets about her trade deficit with China, threatening tariff retribution. However, even America’s economy is running towards capacity constraints, with unemployment, at least for the employable, at or close to cyclical lows. Credit is still fuelling financial asset values, as well as consumption and financing the government deficit. Investment in production, our marker for the application of credit, is taking a back seat, telling us that economic progress, as opposed to increases in GDP, is stagnating. But the expansion, even though weak, is nevertheless there.

All that’s needed to upset the Fed’s monetary planning is for consumer prices to rise significantly above the target rate of 2%. Even though the great American economy is mainly an internal affair, at some stage if the dollar continues to weaken there will be higher price inflation, despite domestic stagnation

Markets should give us a more predictable guide. The first market to turn is always bonds. Falling bond prices can be tolerated by equity markets to a degree, before the net flow of funds out of financial assets gathers pace. This is the current situation in most financial markets. One would expect to see improved trading prospects in the non-financial economy, encouraging inexperienced investors to continue to buy equities, before they too lose bullish momentum.

First bonds, then equities. Property prices should continue to rise, buoyed up by a combination of credit-fuelled economic expansion, wage rises improving affordability, and suppressed real interest rates. In this cycle, demand for retail space has been subdued by online shopping, but demand for office space, particularly outside the US, continues apace. The explosive growth in construction in Asian cities is our evidence. China’s property development programmes are massive, but state-directed with a purpose, so not the best indicator of credit-fuelled capital spending.

It is at this point that banks compete to lend, looking for market share rather than profit. Property is usually a major recipient of bank credit and the boom can be substantial. According to Colliers International, €12.2bn were invested in German commercial real estate in Q1 2017. This is the second time that quarterly transaction volume has exceeded €10bn since the 2007 record year. Japan’s commercial property price index has risen 17% since 2012, not a bad return in Japanese terms. In Dubai, a further 9.9 million square feet of office space is under construction. Similar stories abound elsewhere.

So, the theoretical sequence is bonds top out, followed by equities, followed by property. Bond yields started rising in 2012, and it’s likely the next rise will be enough to call the top on equities. Property prices should continue to rise after that, buoyed up by improved economic conditions, until central banks are eventually forced to raise interest rates to control price inflation. The time-lapse between these events can vary considerably, but as history has repeatedly showed, all three events must take place: one or two are not enough. The final collapse should be in property. In that sense, the great financial crisis of nine years ago was a classic example.

The source of the next crisis

Given the G20 now ensures that when the crisis hits, we all sink together, we must now speculate where the next crisis will arise. We shall assume that the world does not descend into a geopolitical and financial war, though that risk is significant. We must look for extremes between current monetary policy and economic reality, a task made easy for us by central banks, who are always too late in understanding the dynamics of credit and its effect on prices. It is a process of elimination.

We can eliminate the hedge funds’ favourite, China, because the expansion of bank credit is associated with financing genuine economic progress more so than anywhere else. Furthermore, the state tightly controls bank lending and capital flows, and she pays no more than lip service to the credit-cycle coordinating activities of the G20. We can also rule out the US, because her expansion phase has been subdued by her policies of economic isolationism, unless, that is, the dollar collapses against other currencies to the extent the reserve currency becomes the crisis.

Japan’s monetary policy has become less relevant to her economy, unless for some reason ordinary savers suddenly become scared by price inflation. Much Japanese manufacturing is now conducted overseas, and domestically the expansionary phase of the credit cycle is directed at financing the government’s deficit. The British economy is a potential source of systemic danger, given its strong performance and inappropriate monetary policies, but at last the Bank of England is beginning to reconsider its monetary stance.

By far the most likely and dangerous source of the next crisis appears to be the Eurozone. The ECB, distracted by the difficulties in Greece, Italy, Spain and Portugal, maintains a bizarre monetary policy of negative interest rates for bank deposits and a monthly injection of €60bn, aimed at keeping government funding costs as low as possible and the weaker banks solvent. The market distortions are extreme, with the “riskless” 2-year German Schatz bond yielding a negative 0.68%.

Trouble is brewing, with the euro rising 15% against the dollar this year so far. The reflationists at the ECB see this as deflationary, putting pressure on EU exporters, who always lobby for a low exchange rate. Therefore, the temptation to ride out currency strength with no change in monetary policy is strong.

Dollar and sterling interest rates are already rising. The underlying problem for the ECB is they have financed government spending by buying up Eurozone sovereign debt, underwriting inflated bond prices. Governments have got used to artificially suppressed funding costs and will not take kindly to seeing them rise. But even worse, Basel committee rules give sovereign debt a zero-risk weighting for banks, and so the Eurozone’s banks are up to their necks in overpriced government bonds.

Unlike American banking regulators, which since the last credit crisis have forced the US banks to increase their core capital, the ECB has done very little to improve the soundness of Eurozone banks. Therefore, they cannot afford to see government bond yields rise significantly, because the valuation losses will wipe out many banks’ capital. Yet, with the 2-year yield marker still deep in negative yield territory, and the Eurozone economy now demonstrably in the expansionary phase of the credit cycle, here lies the crisis in the making.

Rarely have the financial dynamics appeared more alarming. And as trade with China increases in the coming months, with container-loads of product being shipped overland both ways, the dilemma facing the ECB will worsen. Furthermore, with the dollar set to weaken on a combination of US economic underperformance and growing international antipathy against it as a trade currency, it is hard to see how the euro will not continue to strengthen further.

Notwithstanding these problems, we must expect an initial reversal of current monetary policy. Reluctantly perhaps, the ECB will stop buying financial assets and remove negative deposit rates. However, even this move will hurt the Eurozone banks as short-term bond prices fall, and the prevention of a new banking crisis will dominate monetary policy.

Assuming the systemic fall-out from this initial rise in interest rates and bond yields is contained by nursing the weaker banks, private sector non-financial business should continue to expand. Eurozone CPI inflation is already at 1.5%, with Germany’s at 1.8%. The 2% target rate could be breached early next year, and speculation is likely to mount about further interest rate rises from then on. Government bond yields in the Eurozone are bound to soar, guaranteeing widespread insolvency among the Eurozone’s banks.

For now, the end of negative interest rates and the asset purchase programme should buy some time, perhaps until the middle of next year, by when property prices should be rising strongly. Eurozone companies will be reporting improved trading and rising profits, and the sounder banks competing to lend by cutting their loan rates. Furthermore, with inflation rising, borrowing costs in real terms could be even more negative than they are today. Despite the relative strength of the euro, price inflation, always the balance between excess credit and limited supplies of goods, will become the dominant issue.

All major jurisdictions have this problem to a greater or lesser extent. The specifics differ, but rising rates of price inflation will become common. Thanks to the G20 ensuring everyone is in the same boat, thanks to China’s stimulus to most of the world economy, and thanks to the long-term accumulation of excessive debt, the dynamics behind the next crisis promise to be greater than anything seen heretofore.

Therefore, it looks like the timing will be set by the violent transformation of the ECB’s monetary policy from saving the system from the last crisis, to a realisation that if they don’t act quickly, we will be into the next one, and then the eventual realisation that they must raise interest rates even more sharply. We can tentatively pencil in a date sometime between the middle and the end of next year for this final act, and probably put a time limit on it of early 2019.

How it plays out is another story for another article, but at least we can begin to expect where and roughly when the next credit-fuelled crisis is due to happen.

END

Quite a story:  Fact or fiction:  Marcos’ gold bars:  real or fiction

(courtesy  Gerry Liro/ABS-CBN NEWS)

Philippine dictator Marcos’ gold bars: Fact or fiction?

Based on his deposition, Zobel said Marcos had $100 billion in his name and part of it was the $35 billion in gold bars.

Now that the Duterte administration and the Marcoses are said to be in talks over the Marcos wealth, Pimentel told ABS-CBN News in an interview last week that it is about time the government ascertained the true value of the family’s gold hoard.

Zobel’s disclosure reinforced a long-held view that the Marcoses had kept to themselves a huge treasure on top of the P170-billion Marcos wealth recovered as of 2015 by the government since the four-day peaceful revolt forcibly sent them to Hawaii in February 1986.

Zobel was a Marcos confidante and supporter who stood by him until the strongman died at 72 in exile in Hawaii on September 28, 1989. The tycoon died 15 years later at the Asian Hospital in Muntinlupa. He was 77.

Zobel said Marcos, then weak and ailing, showed him original certificates of the gold bars worth $35 billion, then based on the prevailing price of $400 per ounce, after Marcos asked to borrow some $250 million several months after the Marcos family landed in Hawaii. Marcos signed a promissory note for the loan, with the certificates meant to prove he could pay him back. The promissory note was dated October 17, 1988, one day before was indicted in the United States.

Apart from the gold certificates, which came mostly from Germany, Zobel said Marcos had in possession two more tranches of gold from Suriname, a sovereign state in the northeastern Atlantic coast of South America.

In all he estimated that Marcos had total wealth of some $100 billion. When Flavier asked him if he heard it right, Zobel replied: “Yes, $100 billion.” That was in 1989.

An investment adviser who once worked at UBS-Philippines where Marcos had maintained an account told ABS-CBN News that Marcos affixed not his signature, but his palm print to make a transaction while in Hawaii. At least two UBS officials — Gertrude Erismann-Peyer, spokesperson of the UBS in Switzerland, and its international watchdog Hans Peter Bauer — admitted Marcos had accounts in the bank.

… Worth pursuing

Zobel, one of the country’s richest at that time, said he believed Marcos. He said the certificates looked real.

Pimentel, jailed by Marcos’ military four times for opposing the dictatorship, said Zobel’s disclosure was worth pursuing.

“My view is that no matter how tall the tale sounds, within reason, it should be heard and placed on record where it may later on be analyzed more critically. It should not be dismissed outright,” he said in a speech titled “Still a Long Way to Go” on November 16, 1999, before the Manila Overseas Press Club.

… Historical value

“By receiving such testimonies under oath, the committee helps to document, hopefully, more systematically, people’s stories on the Marcos wealth,” he said.

Pimentel told ABS-CBN News last week that Zobel’s testimony deserved a closer look then and now. “Such testimonies should have some value in law, if not in history,” he said.

Zobel knew wealth like no other, he said. Similarly, Zobel knew gold certificates like no other.

“It was a good thing that the president [Duterte] disclose to the public the Marcos family’s offer,” Pimentel said.

“Now the negotiations should have complete transparency. How much are we really talking about here? And what do they want?”

… Conservative estimate

The 1989 value of the gold bars was 10 times more than the $10-billion estimate the Cory Aquino government made of the entire Marcos loot throughout his 20-year rule. First made by former Sen. Jovito Salonga, founding chair of the Presidential Commission on Good Government, that estimate has not changed since March 1986. Salonga knew then it was a conservative estimate, but cited the difficulty of penetrating the international banking system to get more details.

Gold is power and throughout the centuries people have continued to hold and hoard gold if only because it has maintained its value and stature. People see gold as a way to pass on and preserve their wealth from one generation to the next, especially now that supply has become scarce.

Between 1998 and 2008, the price of gold nearly tripled, reaching the $1,000-an-ounce milestone in early 2008 and nearly doubling between 2008 and 2012, hitting around the $1,800-$1,900 mark, according to various records.

According to the UBS investment adviser, the prices of gold fluctuated once upon a time in the early 1990s, when Marcos’ son, Ferdinand Jr., was reportedly either unloading or transferring some of the family’s gold deposits from one account to another.

… Duterte’s disclosure

President Duterte announced last August 29 on national TV that the Marcos family was willing to return a few hidden gold bars.

If indeed anyone of the Marcos heirs made an offer to the president, it would be the first time for them to officially acknowledge that they indeed had a cache of gold bars, and that these have been in their possession for many years, giving credence to Zobel’s testimony.

In an interview on August 31, Rep. Lito Atienza of the Buhay Party-list group quoted Marcos’s widow, Imelda, as telling him that she wanted to return part of her family’s supposed 7,000-ton gold cache worth roughly P15 trillion.

It wasn’t Imelda’s first time to say so. According to former PCGG commissioner Ricardo Abcede, in various media interviews in 2010, Imelda had told him she had $1 trillion in an account in a New York bank.

… Great gold rush

Where the gold bars came from is another story.

Reports on Marcos’ gold bars have all been conflicting and confusing and, when ranged against each other, they all made up a tall tale.

One report said that Marcos found the Yamashita treasure, including a golden Buddha, when he was still a guerilla commander during the Japanese occupation, and that he got them shipped to Hong Kong, Switzerland, among other places, under his account.

Japanese Gen. Tomoyuki Yamashita had reportedly brought in the treasure, stolen by Japanese forces from various sources in Southeast Asia, and hid it in caves, tunnels, underground complexes or just underground in the Philippines before the arrival of American troops.

… Man who found gold

Another report said that a treasure hunter named Roger Roxas found it somewhere in an underground chamber in Baguio City in 1971, with a permit given by Judge Pio Marcos, a Marcos relative.

Roxas said he and his team found a 3-foot-high golden Buddha from an enclosed chamber on state lands near Baguio, along with bayonets, samurai swords and crates packed with gold bullion, among other items.

A few days after, the story said, two individuals came to him, introducing themselves as gold buyers. To his horror and sorrow, the two men, he learned later, were allegedly spies President Marcos sent to check on him. In no time, military men stormed the area, seized Roxas’ gold find, grabbed him by the throat, beat him black and blue, and held him captive in a godforsaken land for weeks.

Then and now, nobody knows how much the treasure was worth.

… Osmeña’s role

Roxas escaped with the help of Osmeña’s father, former Sen. Sergio Osmena Jr. In an interview with ABS-CBN News, Osmeña III confirmed Roxas’ gold find and escape story, one of the many reasons Marcos reportedly hated the Osmeñas. “That story is true and Roxas went to the US to sue Marcos,” he said in an interview last week.

Freed, Roxas reportedly went to town spreading word of how he discovered the gold and how Marcos stole it from him. In March 1988, he sued Marcos and his family in a Hawaii court to recover the treasure and seek damages. He died on the eve of the trial.

… Hawaii suit

In 1996 the court ruled in Roxas’ favor, but the decision was unclear on the damages as it was uncertain as to the value of the treasure. It said Roxas found a treasure, but could not conclude if it was the one by Yamashita.

In his testimony, Zobel said Marcos recovered part of the Yamashita treasure before the liberation and another part when he was president.

The Yamashita treasure is not fiction, judging from well-researched accounts of book authors and publishers — “The Yamato Dynasty: The Secret History and of Japan’s Imperial Family” (2000) by Sterling Seragrave and Peggy Seagrave; “Gold Warriors: America’s Secret Recovery of Yamashita’s Gold” (2003) by Sterling Seragrave and Peggy Seagrave; and “The Great Gold Swindle: Yamashita Gold, 75 Years of Philippine Corruption” by Phoenix J. Powers. All these books detailed how General Yamashita discovered and hid the treasures in the Philippines.

… Enter McDougald

Whether or not it was the Yamashita treasure that Roxas found, the treasure story so convinced President Corazon Aquino that her government gave full sanction and protection in February 1988 to American treasure hunter Charles McDougald to dig more than 20 feet under Manila’s oldest structure, the 16th-century-built Fort Santiago. (Her maternal family was once the subject of another tall treasure tale before the turn of the 19th century.)

… Central bank vault

One professor from the University of the Philippines cast doubt about the existence of the Yamashita treasure.

One other treasure story is not about the seizure of the Yamashita treasure. It was about the raid of the central bank vault.

After Zobel’s deposition, the Senate committee received information from three potential witnesses — one in Honolulu and two in the Philippines — of the Central Bank raid, according to Pimentel.

It was widely believed that Marcos was running out of cash at the rate Imelda was shopping left and right abroad, and Marcos had to dip his fingers into the central bank.

… Imelda’s treasures

n his book “Incredible Destiny,” author Nigel Blundell, famous for his investigative pieces put together in the book titled “The World’s Most Infamous Murders,” said Imelda continued with her shopping despite economic crisis in the Philippines. She bought designer shoes, dresses, art collections and properties — the Herald Center Shopping Complex, the Crown building, office complexes on Wall Street and Madison Avenue, and houses in New Jersey and New York.

But during a trial in New York, Imelda declared that the Yamashita gold accounted for the bulk of her husband’s wealth.

All that, Pimentel argued, only meant to reinforce the view that the Marcoses stole nothing.

… Willing to share

In a letter to Aquino in February 1989, then vice-president Salvador Laurel said he met with Marcos on his deathbed in October 1997 and that Marcos told him he wanted to return 90 percent of his wealth to Filipinos through a foundation provided he was allowed to come home, die, and be buried in Batac beside his mother, Ilocos Norte.

Aquino showed no interest, Laurel later wrote in his book “Neither Trumpets nor Drums,” published in 1992.

Could the government have settled the issues surrounding Marcos’ stolen wealth had Aquino taken Marcos’ offer?

But neither Zobel nor Laurel carried a message that Marcos was sorry for the plunder of the economy and the deaths of those who opposed his dictatorial regime. That was probably what Aquino was looking for: Should she have allowed Marcos to get away with it in exchange for a fraction of his gold hoard?

History is full of loose ends left untied.

END

Bitcoin slides again as Jamie Dimon doubles down again on cryptocurrency concerns.

(courtesy zerohedge)

Bitcoin Slides After Dimon Doubles Down On Cryptocurrency Concerns: “It Will End Badly”

end

Fame author Martin Katusa sees a rush into physical gold as de-dollarization intensifies:  a must read and view

(courtesy Martin Katusa/Mac Slavo/SHFTPlan)

“You’re Going To See A Rush For Gold” – Katusa Warns De-Dollarization Is Accelerating

(courtesy zerohedge)

London Unexpectedly Revokes Uber’s Operating License; Company Vows Court Challenge

In a stunning blow to the world’s most valuable private company (purportedly worth some $70 billion), London’s taxi and delivery car regulator has said it won’t renew Uber’s operating license once it expires at the end of the month. The regulator said Uber “is not fit and proper to hold a private hire operator license.”

“TfL considers that Uber’s approach and conduct demonstrates a lack of corporate responsibilit in relation to a number of issues which have potential public safety and security implications. These include:

• It’s approach to reporting seriouis criminal offences.
• It’s approach to how medical certificates are obtained.
• It’s approach to how Enhanced Disclosure and Barring Service (DBS) checks are obtained.
• It’s approach to explaining the use of Greyball in London, software that could be used to block regulatory bodies from gaining full access to the app and  prevent officials from undertaking regulatory or law enforcement duties.”

View image on Twitter

 Follow

Transport for London 

✔@TfL

TfL has today informed Uber that it will not be issued with a private hire operator licence.

Uber now has 21 days to appeal the decision.  “We intend to immediately challenge this in the courts,” said Tom Elvidge, general manager of Uber in London, in a statement to Bloomberg. If the decision holds and Uber is forced to shutter its London operations, the estimated 40,000 Uber drivers working in London will need to seek employment elsewhere.

“By wanting to ban our app from the capital Transport for London and the Mayor have caved in to a small number of people who want to restrict consumer choice,” said Elvidge. “If this decision stands, it will put more than 40,000 licensed drivers out of work and deprive Londoners of a convenient and affordable form of transport.”

In a statement to the Financial Times, London Mayor Sadiq Khan said: London mayor Sadiq Khan said: “All companies in London must play by the rules and adhere to the high standards we expect – particularly when it comes to the safety of customers. Providing an innovative service must not be at the expense of customer safety and security. I fully support TfL’s decision.”

The decision is a shot across the bow for Uber, which now has added prominent service disruption to its countless scandals. In particular, the London regulator cited the company’s use of a clandestine software called Greyball as one reason for revoking its operating license. In March, the New York Times revealed that Uber has for years engaged in a program to deceive authorities in cities where its app was being resisted or banned by law enforcement. Uber reportedly used a tool, called Greyball, which uses data collected from Uber’s app and other techniques to identify and circumvent officials. The car-hailing company used these to evade authorities in cities such as Paris, Boston and Las Vegas, and in countries including Australia, China, South Korea and Italy. The blow from the regulator comes at a time when the company is trying to burnish its image. It recently hired Expedia’s Dara Khosrowshahi as its new chief executive in August after co-founder Travis Kalanick was forced to step aside after a series of scandals. Uber was also faulted for not properly reporting crimes and obtaining medical certifiications.

As Bloomberg points out, the decision is a victory for the city’s traditional black cab industry, which has been hurt by the proliferation of Uber drivers and has pushed for tighter regulation of the San Francisco-based ride-hailing service. Taxi drivers must go through extensive testing before receiving a license, while Uber drivers have fewer requirements.

The decision adds to the problems facing Khosrowshahi, who is already dealing with a host of lawsuits and US criminal probe into its Asia operations after several Uber executives bribed foreign officials to help obtain access to lucrative markets. Oh, it’s also facing a federal investigation for allegedly spying on Lyft drivers.

end

No real news on the BREXIT scene except that it will take 2 years and that there is considerable headwinds for the pound.  It fail on the news

(courtesy zero hedge)

“No News Is Bad News”: May Calls For 2 Year brexit “Transition Period”, No Mention Of Early Departure

Theresa May’s speech has concluded, and while she did not confirm prior rumors that she may call for early EU departure prior to 2019, cable is lower on what has been called a “no news is bad news” speech, because as Danske Bank said, May’s remarks in which she confirmed that the UK will be leaving the EU, highlight the Brexit remains a headwind for the pound.

Among the key highlights of her speech, May said that there should be a transition phase to allow businesses, people, and public services to “adjust to new arrangements in a smooth and orderly way.”
The UK PM said that “access to one another’s markets should continue” on existing terms during transition and that the framework for this transition should be “the existing structure of EU rules” and regulations.

She also said that there will be a registration system for EU workers coming to U.K. during transition adding that the transition or “implementation” period will last “around two years” and should be agreed on “as early as possible.” 

Finally, May calls for a clear “double lock” guaranteeing transition but also guaranteeing that period will be “time-limited” so public knows “that this will not go on forever”

Cable has slumped 80 pips, having started its decline ahead of the speech, and bottoming around 1.35

As Bloomberg adds, May’s acknowledgment of the Brexit bill is perhaps helping the pound’s resilience, yet the lack of details is proving problematic for investors. While May said “the U.K. will honor commitments we have made,” Brits “want to continue working together,” and “would want to make an ongoing contribution to cover our fair share,” she sidestepped mentioning any amount and didn’t really say how that amount would be determined. All she did say was that she “would not want our partners to fear they need to pay more or receive less over the remainder of the current budget plan.”

Also, with cable slumping, both the FTSE100 and 10Y yields have rebounded on May’s speech.

END

In a totally surprised move after 5 pm, Moody’s downgrades UK from Aa1 down to Aa2 to which our Pound flash crashed.

(courtesy zerohedge)

Pound Flash Crashes After Moody’s Downgrades UK To Aa2

In an otherwise boring day, when Theresa May failed to cause any major ripples with her much anticipated Brexit speech, moments ago it was Moody’s turn to stop out countless cable longs, when shortly after the US close, it downgraded the UK from Aa1 to Aa2, outlook stable, causing yet another flash crash in the pound.

As reason for the unexpected downgrade, Moodys cited “the outlook for the UK’s public finances has weakened significantly since the negative outlook on the Aa1 rating was assigned, with the government’s fiscal consolidation plans increasingly in question and the debt burden expected to continue to rise.“

It also said that fiscal pressures will be exacerbated by the erosion of the UK’s medium-term economic strength that is likely to result from the manner of its departure from the European Union (EU), and by the increasingly apparent challenges to policy-making given the complexity of Brexit negotiations and associated domestic political dynamics.

Moody’s now expects growth of just 1% in 2018 following 1.5% this year; doesn’t expect growth to recover to its historic trend rate over coming years. Expects public debt ratio to increase to close to 90% of GDP this year and to reach its peak at close to 93% of GDP only in 2019.

And so, once again, it was poor sterling longs who having gotten through today largely unscathed, were unceremoniously stopped out following yet another flash crash in all GBP pairs.

Full release below:

Moody’s Investors Service, (“Moody’s”) has today downgraded the United Kingdom’s long-term issuer rating to Aa2 from Aa1 and changed the outlook to stable from negative. The UK’s senior unsecured bond rating was also downgraded to Aa2 from Aa1.

The key drivers for the decision to downgrade the UK’s ratings to Aa2 are as follows:

1. 1. The outlook for the UK’s public finances has weakened significantly since the negative outlook on the Aa1 rating was assigned, with the government’s fiscal consolidation plans increasingly in question and the debt burden expected to continue to rise;
2. 2. Fiscal pressures will be exacerbated by the erosion of the UK’s medium-term economic strength that is likely to result from the manner of its departure from the European Union (EU), and by the increasingly apparent challenges to policy-making given the complexity of Brexit negotiations and associated domestic political dynamics.

Concurrently, Moody’s has also downgraded to Aa2 the Bank of England’s issuer and senior unsecured bond ratings from Aa1. The rating on its senior unsecured medium-term note (MTN) program was downgraded to (P)Aa2 from (P)Aa1. The short-term issuer ratings were affirmed at Prime-1. The ratings outlook was also changed to stable from negative.

The foreign and local currency bond ceilings and the local-currency deposit ceiling remain unchanged at Aaa/P-1. The foreign-currency long-term deposit ceiling was lowered to Aa2 from Aaa, and the short-term deposit ceilings remain P-1.

RATIONALE FOR THE DOWNGRADE TO Aa2

FIRST DRIVER: WEAKENING PUBLIC FINANCES WITH HIGHER BUDGET DEFICITS IN THE COMING YEARS AMID PRESSURE TO RAISE SPENDING

Moody’s expects weaker public finances going forward, partly linked to the economic slowdown under way but also reflecting the increasing political and social pressures to raise spending after seven years of spending cuts. Since 2015, the government has been finding it increasingly difficult to implement the spending cuts that it has been targeting, in particular on welfare spending. More recently, the government has yielded to pressure and raised spending in several areas, including for health and adult social care. It also agreed to above-budget pay increases for some public sector workers. While these additional expenditures will be funded out of current budgets, the pressure to continue to increase spending in the coming years is likely to remain high, in particular on health care and the public sector wage bill.

In addition, in order to secure a working parliamentary majority, the new government agreed a ‘confidence and supply’ arrangement that increases public spending by GBP1 billion for Northern Ireland. It also abandoned a pre-election promise to review the costly so-called “triple lock” on state pensions after 2020. Overall, Moody’s expects spending to be significantly higher than under the government’s current budgetary plans and higher than the rating agency expected when the negative outlook was assigned in June 2016.

At the same time, revenues are unlikely to compensate for higher spending. Earlier this year, the government abandoned a planned increase in national insurance contributions for the self-employed. Instead, the government has become reliant on highly uncertain revenue gains from tackling tax avoidance to fund tax cuts, as the Office for Budget Responsibility recently pointed out. Hence, while last year’s general government budget deficit turned out somewhat lower than expected (3.0% of GDP on a calendar year basis), Moody’s expects the (general government) budget deficit to remain at levels of 3-3.5% of GDP in the coming years, against the government’s plan of a gradual reduction to below 1% of GDP by 2021/22.

The UK’s broader fiscal framework — previously one of the strengths of the sovereign’s credit profile — has also weakened in recent years as illustrated by repeated revisions to medium-term fiscal targets and delays in reversing the rising debt trend. In contrast to the government’s earlier plans to have public sector net borrowing in surplus by 2019-20, the current objective is for the structural deficit to be below 2% by 2020-21; and the supplementary objective of having net debt as a percentage of GDP decline every year has been delayed to 2020-21 (from 2015-16 before). While these targets may be more realistic, the changes signal weaker predictability.

Weaker public finances will imply a further delay in reversing the rising public debt ratio. This places the UK among the few highly-rated European sovereigns where the public debt ratio continues to rise. Moody’s expects the ratio to increase to close to 90% of GDP this year and to reach its peak at close to 93% of GDP only in 2019, two years later than the latest government plans. Moreover, while the UK government benefits from one of the longest average maturities of its debt stock among advanced economies, the cost of the debt is comparatively high with Moody’s preferred metric — interest payments as a share of government revenues — at 6.3% compared to a ratio of around 3.6% for most other Aa2-rated peers.

SECOND DRIVER: EROSION OF ECONOMIC STRENGTH AS A RESULT OF EU EXIT DECISION AND INCREASING CHALLENGES TO POLICYMAKING

Moody’s believes that the UK government’s decision to leave the EU Single Market and customs union as of 29 March 2019 will be negative for the country’s medium-term economic growth prospects. Aside from the direct impact on the UK’s credit profile, the loss of economic strength will further exacerbate pressures on fiscal consolidation.

Growth has slowed in recent months, with average quarterly growth of just 0.26% in the first two quarters, versus an average of 0.6% over the 2014-2016 period. Private consumption has slowed sharply and business investment has been weak since 2016, most likely linked to the Brexit-related uncertainty. While future years may see some recovery, Moody’s expects growth of just 1% in 2018 following 1.5% this year and 2.25% on average in recent years.

More importantly for the UK’s credit profile, Moody’s does not expect growth to recover to its historic trend rate over the coming years. The UK is a relatively open economy, and the EU is by far its largest trading partner. Research by the National Institute of Economic and Social Research (NIESR) suggests that leaving the Single Market will result in substantially lower trade in goods and services with the EU. In a similar vein, both the NIESR and the Bank of England estimate that private investment will be materially lower in the coming years than in a non-Brexit scenario.

Moody’s is no longer confident that the UK government will be able to secure a replacement free trade agreement with the EU which substantially mitigates the negative economic impact of Brexit. While the government seeks a “deep and comprehensive free trade agreement” with the EU, even such a best-case scenario would not award the same access to the EU Single Market that the UK currently enjoys. It would likely impose additional costs, raise the regulatory and administrative burden on UK businesses and put at risk the close-knit supply chains that link the UK and the EU. Also, free trade arrangements do not as a standard cover trade in services — which account for close to 40% of the UK’s exports to the EU and 80% of Gross Value Added in the economy — given the prevalence of non-tariff trade restrictions and the need to align regulations and standards. In Moody’s view, the differences of outlook between the UK and the EU suggest that the most likely outcome is now a rather more limited free trade agreement which may exclude services: the UK’s desire to pursue its own regulatory policies and to avoid the jurisdiction of the European Court of Justice will make finding an agreement on services challenging. Moreover, any free trade agreement will likely take years to negotiate, prolonging the current uncertainty for businesses.

Aside from the direct impact on the UK’s credit profile, weakening growth prospects are likely to exacerbate the government’s evident fiscal challenges. And this is likely to be happening during a period in which policymakers will be increasingly distracted by the twin challenges of sustaining a domestic political consensus on how to operationalise Brexit and reaching agreement with EU counterparts.

Brexit carries with it a heavy policy and legislative agenda which will dominate policymaking in the years to come. In addition to ensuring a smooth exit from the EU, the UK authorities aim for significant changes to the UK’s immigration policy, its broader trade policies as well as regulatory policies. With Brexit dominating the government’s legislative priorities for the coming years, there is likely to be limited political capital and civil service capacity to address other challenges relating to the UK’s growth potential and weak productivity growth. While Moody’s continues to assess the UK’s institutional strength to be very high, the challenges for policymakers and officials are substantial and rising. The recent loss of the UK government’s parliamentary majority further obscures the future direction of economic policy.

RATIONALE FOR STABLE OUTLOOK

The fiscal deterioration that Moody’s expects is balanced by the UK’s continued economic and institutional strengths, that compare well to peers at the Aa2 rating level. While the ongoing Brexit negotiations introduce a high level of uncertainty over the economic outlook for the UK, Moody’s base case remains that some form of a free trade agreement is in the interest of both sides and will ultimately be agreed. Such a scenario would mitigate the negative economic implications of the UK’s departure from the EU to some extent.

In that context, Moody’s notes that the UK government may be softening its negotiating stance in a number of areas, including on the European Court of Justice, on continuing budget contributions in the transition phase and most importantly on the need for a transitional agreement beyond March 2019 to limit the disruption to trade following the UK’s exit.

WHAT COULD CHANGE THE RATING UP/DOWN

The combination of eroding fiscal and economic strength which drove today’s action implies limited upside to the rating following the downgrade. Over the longer term, a more rapid and sustained recovery in fiscal strength, together with evidence that the economic impact of Brexit is less material than Moody’s currently estimates would be positive for the rating.

The rating would come under further downward pressure if Moody’s concluded that public finances were likely to weaken further than Moody’s currently expects. It would also be under pressure if Moody’s concluded that the economic impact of the decision to exit the EU would be more severe than Moody’s currently expects, perhaps because the negotiations with the EU failed to secure an effective transition agreement that would allow for an orderly transition to new trade arrangements.

SPAIN/CATALONIA

Rajoy is sending in the police trying to prevent the referendum from taking place.  It is having unintended consequences.  Those who were originally voting no, upon seeing signs that they were going back to Francoism, have now decided to vote in the positive.

(courtesy zerohedge)

Unintended Consequences & Ugly Repercussions: It’s Getting Worse In Catalonia

As NakedCapitalism’s Jerri-Lynn writes, the Catalonia crisis is accelerating, with Madrid’s crackdown increasing support for independence even among those previously not so disposed. This does not look like it will end well.

Spain will deploy police reinforcements to the northeastern region of Catalonia to maintain order and take action if a referendum on independence pledged by the Catalan government but deemed illegal by Spain should take place, officials said Friday.

AP reports that an Interior Ministry statement said the extra agents would provide backing for the Catalan regional police who are also under orders to prevent the staging of the referendum.

But protests continue to grow and Rajoy’s actions only seem to solidify opposition…

“I feel the way people used to feel during Franco regime. Nothing less. Because Francoism is still alive,” said protester Josep Selva, referring to Gen. Francisco Franco’s military regime that ruled Spain between 1939 and 1978, three years after his death.

“The political reform of 1978 only legalized Francoism and disguised it as democracy,” he said.

But, as WolfStreet.com’s Don Quijones points outMadrid’s crackdown on Catalonia is already having one major consequence, presumably unintended: many Catalans who were until recently staunchly opposed to the idea of national independence are now reconsidering their options.

A case in point: At last night’s demonstration, spread across multiple locations in Barcelona, were two friends of mine, one who is fanatically apolitical and the other who is a strong Catalan nationalist but who believes that independence would be a political and financial disaster for the region. It was their first ever political demonstration. If there is a vote on Oct-1, they will probably vote to secede.

The middle ground they and hundreds of thousands of others once occupied was obliterated yesterday when a judge in Barcelona ordered Spain’s militarized police force, the Civil Guard, to round up over a dozen Catalan officials in dawn raids. Many of them now face crushing daily fines of up to €12,000.

The Civil Guard also staged raids on key administrative buildings in Barcelona. The sight of balaclava-clad officers of the Civil Guard, one of the most potent symbols of the not-yet forgotten Franco dictatorship, crossing the threshold of the seats of Catalonia’s (very limited) power and arresting local officials, was too much for the local population to bear.

Within minutes almost all of the buildings were surrounded by crowds of flag-draped pro-independence protesters. The focal point of the day’s demonstrations was the Economic Council of Catalonia, whose second-in-command and technical coordinator of the referendum, Josep Maria Jové, was among those detained. He has now been charged with sedition and could face between 10-15 years in prison. Before that, he faces fines of €12,000 a day.

The confiscation of ballots and other vital voting paraphernalia and the detention of key members of the referendum’s organizing committee, together with today’s decision by the Spanish Finance Ministry to completely block the regional government’s accounts — a move that would not be possible without full cooperation of both Spanish and Catalan banks — could be a major setback for Catalonia’s dreams of independence.

Without ballots, voter databases and ballot boxes, organizing a referendum is going to be a tough task, especially if Catalonia’s government no longer has access to public funds. But it will still try. It’s already launched a new website informing the public of the location of voting colleges on October 1. The site replaces dozens of other URLs that have been shut down at the behest of Spanish authorities.

Nonetheless, yesterday’s police operation significantly — perhaps even irreversibly — weakens Catalonia’s plans to hold a referendum on October 1, as even the region’s vice-president Oriol Junqueras concedes. But that doesn’t mean Spain has won. As the editor of El Diario, Ignacio Escolar, presciently notes, yesterday’s raids may have been a resounding success for law enforcement, but they were an unmitigated political disaster that has merely intensified the divisions between Spain and Catalonia and between Catalans themselves.

Each time Prime Minister Rajoy or one of his ministers speak of the importance of defending democracy while the Civil Guard seizes posters and banners related to the October 1 vote and judges rule public debates on the Catalan question illegal and then fine their participants, a fresh clutch of Catalan separatists is born.

In the days to come they will be swarming the streets, waving their flags, clutching their red carnations and singing their songs. For the moment, the mood is still one of hopeful, resolute indignation. But the mood of masses is prone to change quickly, and it’s not going to take much to ignite the anger.

Madrid is sending three ships with a total of 6,000 non-Catalan police reinforcements to Barcelona in the coming week. In reaction, the stevedores at Barcelona Port have voted not to provide any services to the ships, which they consider to be “ships of repression.”

If it spirals out of control, the conflict between Barcelona and Madrid could have ugly repercussions far beyond Spanish borders,as we warned in a 2015 article. Yet the European Union steadfastly refuses to mediate in the crisis, arguing that it must respect Spain’s constitution.

Given Brussels’ long-standing habit of meddling in others’ affairs, including toppling the elected leaders of Greece and Italy at the height of Europe’s sovereign debt crisis, it’s a poor excuse. And most of Europe’s governments (with the possible exception of the UK, which is already engaged in a gargantuan struggle with Brussels) refuse to support Catalonia’s separatist movement out of the fear — largely justifiable — that it could fuel separatist tensions closer to home.

But the crisis in Catalonia is not going to go away just by ignoring it.

In the last few weeks alone three major international newspapers — Le Monde, The New York Times and The Times — have called for Madrid to allow a referendum. And with Rajoy and his government seemingly determined to pummel Catalonia into submission, at just about any cost, the chances are that their ranks will grow.

And this is where Madrid is making arguably its biggest mistake.For a new country to be born, it must first be recognized. Thanks to years of sustained, non-violent protest and the often overblown reaction of the Rajoy government, Catalonia has already massively increased the positioning of its brand internationally. Ten years ago, most people in the world didn’t even know what or where Catalonia was. Now, it’s hogging the headlines of the front pages of the biggest newspapers.

“Do not underestimate the power of Spanish democracy.”

Read…  Catalonia’s Defiance of Spanish Authority Turns into Rebellion

*  *  *

Finally, as NakedCapitalism’s Yves discussed earlier this week, Catalonia could exercise the nuclear option of defaulting on its debt– which would have serious consequences for itself and for the government in Madrid. Although this still looks to be a remote possibility, Madrid’s latest aggressive measures have made no headway in defusing that potential bomb

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

IRAN

Iran unveils new ballistic missile with multiple warheads and capable of travelling 1200 miles enough to strike Israel and much of the middle east.  They state that they will not seek permission to produce defensive weapons.

(courtesy zerohedge)

“We Will Not Seek Permission”: Defiant Iran Unveils New Ballistic Missile

Iranian President Hassan Rouhani delivered another snub to the Trump administration on Friday when he said that Iran would continue its missile program in defiance of US sanctions, and to underscore the determination, the Iranian Revolutionary Guard unveiled its newest long-range ballistic missile during a military parade in Tehran.

The new missile that was introduced at the parade is capable of reaching much of the Middle East, including Israel, with a range of 1,200 miles. It’s also capable of carrying several warheads. The parade in Tehran commemorated the 1980s Iraq-Iran war. Though Iran has long boasted of having missiles in the same range in its arsenal, it was the first time that the new Khoramshahr missile was displayed in public,the AP reported adding that in February, Iran test-fired the same medium-range type of missile, prompting Trump to say that the United States is “putting Iran on notice.”

Friday’s parade also showcased various Iranian army units and Revolutionary Guard forces, as well as the police, according to the Associated Press. Similar parades were held in other Iranian cities.

Rouhani addressed the parade in Tehran, saying that Iran would not halt its missile program but continue to boost military capabilities, despite U.S. demands.

“We will increase our military power as a deterrent. We will strengthen our missile capabilities … We will not seek permission from anyone to defend our country.

“All countries in the world supported the nuclear deal in the United Nations General Assembly this year … except the United States and the Zionist regime (Israel),” Rouhani said.

During his address to the general assembly earlier in the week, Rouhani slammed the US and Trump for reneging, and claimed that the Iran deal belongs “to the world” and “cannot be renegotiated.” He criticized Trump’s “ugly, ignorant words” made during Trump’s own address where he urged world powers to come together and pressure the Iranian regime. Rouhani added that the country’s missile program is vital to national security, citing the country’s long-running war with Iraq in the 1980s as justification for the program.

Iran has continued its ballistic missiles program in defiance of sanctions signed into law by US President Donald Trump in August that targeted any person or company that does business with any entity designated by the administration as having a connection to Iran’s missile program. The White House said the sanctions were also levied in response to the country’s purported support of terrorists and alleged human rights violations.

Trump said earlier this week that he has made up his mind about whether to re-certify Iran’s compliance with the deal, but has yet to reveal his decision publicly. The administration has until Oct. 15 to decide whether to label Iran compliant or not. The White House certified in July that Iran was in compliance with the nuclear deal, but would “face consequences” for violating the “spirit” of the deal.

In a press conference Wednesday night, US Secretary of State Rex Tillerson repeated the administration’s line that Iran, while technically in compliance with the deal’s terms, has continued to engage in destabilizing behaviors like funding Hezbollah, and Shia militias fighting on behalf of embattled Syrian President Bashar Al Assad, and by continuing its ballistic weapons program. Tillerson said the agreement must be altered, or the US wouldn’t be able to abide by its terms.

Other signatories to the deal have expressed reluctance to renegotiate. According to Reuters, Chinese Foreign Minister Wang Yi said tensions on the Korean peninsula underlined the importance of the Iranian deal, and that China would continue to support it. Russian Foreign Minister Sergei Lavrov said that the US imposition of unilateral sanctions on Iran was “illegitimate and undermines the collective nature of international efforts.”

 end

ISRAEL/SYRIA

Israel strikes at a Damascus ammunition depot just outside the capital city’s airport.  Israel destroys an Iranian made Syrian drone along the Golan heights.  Both hits were from the Lebanese side of the border as Israel is careful not to cause any problems with the Russians.  Israel wants to eliminate the Hezballoh/Iranian forces inside Syria

(courtesy zerohedge)

Israel Strikes Damascus After Syrian Missile Defense Fires On Aircraft

For the third time in as many weeks Israel has reportedly bombed positions inside Syria. Syrian state media along with multiple regional outlets showed fires burning at a facility near the Damascus international airport in the early hours of Friday. Israeli newspaper Haaretz reports that like with previous attacks, Israel jets fired from over Lebanese airspace. But it appears the latest exchange was part of a tit-for-tat exchange of fire between Syria and Israel in a situation that continues to dangerously escalate. 

Multiple reports are circulating that the Israeli attack was initiated after Syria’s aerial defense missile system engaged and fired on an Israeli aircraft in the area. Video of what purports to show Syrian missiles firing on the aircraft circulated widely in Syrian social media and was picked up by Lebanese and Israeli news outlets. Early reports indicate that an Israeli drone was likely the target.

 Follow

Hamosh @Hamosh84

#Syrian air defense downing an #Israeli drone over #Syriatonight.

It appears that Israel’s attack came in response to Syria’s engaging the unidentified aircraft – though it’s unclear if the target was hit. This latest incident is unique for the fact that Syria quickly publicized that its missile defense system engaged the Israeli target.

The Facebook page of a prominent Syrian pro-government militia reported in the early morning hours that, “an area near the Damascus international airport was attacked by a hostile missile.” Israeli newspapers are claiming the site to be an ammunition storage depot.

Early Friday morning images of the aftermath of the Israeli strike circulated in regional media. Image source: Jerusalem Post via Syrian social media. 

The exchange of fire comes after a Tuesday incident wherein the Israel Defense Forces shot down what it identified as an Iranian-made drone which departed from Damascus and subsequently entered the demilitarized zone along the border on the Golan Heights. Israel’s aerial defense command fired a Patriot missile and destroyed the drone.

Meanwhile, Israeli jets have been illegally operating in Lebanese airspace with increased intensity of late – even to the point of causing temporary moments of panic over southern Lebanon as low flying jets sometimes break the sound barrier. Violation of Syrian airspace was more brazen in previous years of the war, but as we’ve explained previously it appears that Israel is carefully calculating it’s strike positions over “neutral” Lebanese airspace so as not to force a Russian response by directly violating Syrian space.

Weeks ago senior Israeli officials were quoted as threatening to assassinate Syrian President Assad by bombing his palace in Damascus, while further adding that Israel will seek to derail the US-Russia brokered de-escalation deal reached in Astana, Kazakhstan earlier this summer. The Astana deal essentially put Russia in the driver’s seat in Syria, which Israel sees as guaranteeing a permanent Iranian presence – something Prime Minister Netanyahu sees as intolerable.

Though rarely acknowledged in the media, Israel and Syria have been at open war since at least 2013, when Israel launched a massive missile attack against a Syrian defense technology facility in Jamraya outside of Damascus. Israel has also targeted Damascus International Airport on a number of occasions. During the summer, the head of Israel’s air force acknowledged nearly one hundred IDF attacks on convoys inside Syria over the course of the past 5 years. And as a Wall Street Journal investigation confirmed, the Israeli army has been providing military aid to al-Qaeda linked rebels operating in Syria’s south for years.

END

NWS Declares “Extremely Dangerous Situation” After Puerto Rico Dam Fails

With electricity and cell phone service still offline across most of hurricane-damaged island, NBC reports that a dam in northwest Puerto Rico has failed, causing even more flash flooding and prompting emergency evacuations.

Guajataca Dam operators said it failed at 2:10 pm ET, prompting the NWS to issue a flash flood emergency warning for Isabela and Quebradillas municipalities.

“This is an EXTREMELY DANGEROUS SITUATION. Busses are currently evacuating people from the area as quickly as they can,” NWS San Juan said.

A warning was also issued for residents living in areas surrounding the Guajataca River who, according to NEW San Juan “should evacuate NOW” as their lives are in danger.

View image on Twitter

 Follow

NWS San Juan 

✔@NWSSanJuan

215PM FLASH FLOOD EMERGENCY for A Dam Failure in Isabela Municipality y Quebradillas Municipality in Puerto Rico… #prwx

2h

NWS San Juan 

 ✔@NWSSanJuan

215PM FLASH FLOOD EMERGENCY for A Dam Failure in Isabela Municipality y Quebradillas Municipality in Puerto Rico… #prwx pic.twitter.com/L3utOjxspR

 Follow

NWS San Juan 

✔@NWSSanJuan

At 210 PM, dam operators reported the Guajataca Dam is failing causing flash flooding downstream on the Rio Guajataca.#PRWX

2h

NWS San Juan 

 ✔@NWSSanJuan

215PM FLASH FLOOD EMERGENCY for A Dam Failure in Isabela Municipality y Quebradillas Municipality in Puerto Rico… #prwx pic.twitter.com/L3utOjxspR

 Follow

NWS San Juan 

✔@NWSSanJuan

This is an EXTREMELY DANGEROUS SITUATION. Busses are currently evacuating people from the area as quickly as they can #prwx

 Follow

NWS San Juan 

✔@NWSSanJuan

All Areas surrounding the Guajataca River should evacuate NOW. Their lives are in DANGER! Please SHARE! #prwx

3:55 PM – Sep 22, 2017

According to federal reservoir data, the lake behind the dam, Lago de Guajataca, rose more than three feet between Tuesday and Wednesday, when the storm was still directly over the island. More recent data were unavailable.

More than 95% of Puerto Rico’s wireless cell sites are currently out of service, according to the FCC. That is worse than the aftermath of Hurricane Irma, which knocked out 56% of the island’s wireless network. Federal Emergency Management Agency Administrator Brock Long said restoring electricity to the island “could take weeks or many, many months.”

end

1 Million Ohio Public Employees Face Pension Cuts As Another Ponzi Teeters On The Brink

We’ve written frequently of late about the pension crisis in Kentucky where pensioners are facing potentially catastrophic benefit cuts as their politicians finally admit that they’ve been sold a fantasy for decades (see: Pension Consultant Offers Dire Outlook For Kentucky: Freeze Pension And Slash Benefits Or Else).

Unfortunately, Kentucky is not unique as there is a never-ending stream of similar pension failures popping up daily all around the country.  The latest such example comes to us from Ohio as the Dayton Daily News notes that the Ohio Public Employees Retirement System (OPERS) has been forced to consider COLA cuts for its 1 million pensioners in order to keep the fund solvent.

Ohio’s biggest public pension system is considering cutting the cost of living allowances for its 1-million members as a way to shore up the long-term finances of the fund.

Ohio Public Employees Retirement System trustees on Wednesday discussed options that could affect all current and future retirees, including tying the cost of living allowance to inflation and capping it and delaying the onset of the COLA for new retirees.

No decision has been made and trustees will discuss the options again in October. So far, some 72,000 members responded to an OPERS survey about possible changes. OPERS spokesman Todd Hutchins said 70 percent of retirees responding to the survey report that they prefer that the COLA be capped, rather than frozen.

So how bad is OPERS?  Per the latest valuation, Ohio taxpayers are on the hook for a roughly $20 billion underfunding.  Ironically, the fund ended 2016 with the highest underfunding in it’s history, after being nearly fully funded in 2007, despite a 275% surge in the S&P off the lows in 2009.  Perhaps someone can explain to us how these pensions stand a chance of ever again being fully funded if they can’t even manage to improve their balance sheet during one of the biggest equity bubbles in history?

Be that as it may, like all pensions the OPERS underfunding is only as good as the garbage assumptions used to calculate it.  As the following table shows, a mere 1% reduction in OPERS’ discount rate would result in a $12 billion increase in the fund’s net liability.

Ironically, even OPERS’ own financial report pegs its “Weighted Average Long-Term Expected Real Rate of Return” at just 5.66%.

Not surprisingly, OPERS is just one of many Ohio public pensions currently facing cuts.

OPERS is the latest of the five public pensions systems in Ohio to consider benefit cuts.

The State Teachers Retirement System of Ohio in April voted to indefinitely suspend the COLA for retired teachers. Trustees said they weren’t certain that the cut would be enough to shore up the finances of the $72-billion fund.

Ohio Police & Fire Pension Fund is expected to hire a consultant to help restructure its health care benefits. OP&F announced in May it would switch in January 2019 to issuing stipends to each retiree, who can then use the money to purchase coverage.

School Employees Retirement System, which covers janitors, bus drivers and cafeteria workers, is taking steps to link its cost of living allowance to inflation, cap it at 2.5 percent, and delay its onset for new retirees.

Meanwhile, by protesting earlier this week Ohio employees demonstrated that they’re still in the “Shock and Denial” phase of dealing with the news that their pensions were always just a clever little fairy tale told to earn their votes.  Luckily, “Anger and Bargaining” is only 2 steps away in the 7-step process…

end

Trump’s last ditch effort to repeal Obamacare fails as McCain votes no the Graham-Cassidy bill.  After Sept 30, they will need 60 votes which will be impossible. When the news came out that McCain killed the GOP’s last ditch effort to repeal both gold and silver caught bids as it looks like Trump will have considerable trouble passing anything.

(courtesy zerohedge)

John McCain Kills GOP’s Last Ditch Efffort To Repeal Obamacare

Third time turned out to be unlucky after all.

Earlier today, Sen. Susan Collins said that she has serious concerns about the latest GOP bill to repeal and replace ObamaCare as Republicans prepare to vote on the legislation next week, adding that she was “leaning against the bill… I’m just trying to do what I believe is the right thing for the people of Maine.”  And with Collins voicing against the bill, it meant that GOP leadership would be left with no room for error if they want to get their last-ditch ObamaCare repeal bill through the Senate next week.

The math is simple: Republicans have 52 seats and need 50 senators to support the bill, which would require Vice President Pence to break a tie, under the special budget rules being used to avoid a Democratic filibuster.  Sen. Rand Paul has already said he will vote against the legislation.

Which meant that losing just one more vote would mean the end of this latest attempt to repeal Obamacare.

They lost it moments ago when John McCain said in a statement that “I cannot in good conscience vote for the Graham-Cassidy proposal”

View image on Twitter

 Follow

John McCain 

✔@SenJohnMcCain

I cannot in good conscience vote for Graham-Cassidy. A bill impacting so many lives deserves a bipartisan approach. http://bit.ly/2xtEuvz 

The senator added that “I would consider supporting legislation similar to that offered by my friends Senators Graham and Cassidy were it the product of extensive hearings, debate and amendment. But that has not been the case. Instead, the specter of September 30th budget reconciliation deadline has hung over this entire process.

ULtimately, McCain demands the Democrats be part of any solution: “A bill of this impact requires a bipartisan approach”

His full statement below:

STATEMENT BY SENATOR JOHN McCAIN ON HEALTH CARE REFORM

Washington, D.C. — U.S. Senator John McCain (R-AZ) released the following statement today on health care reform:

“As I have repeatedly stressed, health care reform legislation ought to be the product of regular order in the Senate. Committees of jurisdiction should mark up legislation with input from all committee members, and send their bill to the floor for debate and amendment. That is the only way we might achieve bipartisan consensus on lasting reform, without which a policy that affects one-fifth of our economy and every single American family will be subject to reversal with every change of administration and congressional majority.

“I would consider supporting legislation similar to that offered by my friends Senators Graham and Cassidy were it the product of extensive hearings, debate and amendment. But that has not been the case. Instead, the specter of September 30th budget reconciliation deadline has hung over this entire process.

“We should not be content to pass health care legislation on a party-line basis, as Democrats did when they rammed Obamacare through Congress in 2009. If we do so, our success could be as short-lived as theirs when the political winds shift, as they regularly do. The issue is too important, and too many lives are at risk, for us to leave the American people guessing from one election to the next whether and how they will acquire health insurance. A bill of this impact requires a bipartisan approach.

“Senators Alexander and Murray have been negotiating in good faith to fix some of the problems with Obamacare. But I fear that the prospect of one last attempt at a strictly Republican bill has left the impression that their efforts cannot succeed. I hope they will resume their work should this last attempt at a partisan solution fail.

“1 cannot in good conscience vote for the Graham-Cassidy proposal. I believe we could do better working together, Republicans and Democrats, and have not yet really tried. Nor could I support it without knowing how much it will cost, how it will effect insurance premiums, and how many people will be helped or hurt by it. Without a full CB0 score, which won’t be available by the end of the month, we won’t have reliable answers to any of those questions.

“I take no pleasure in announcing my opposition. Far from it. The bill’s authors are my dear friends, and I think the world of them. I know they are acting consistently with their beliefs and sense of what is best for the country. So am I.

“I hope that in the months ahead, we can join with colleagues on both sides of the aisle to arrive at a compromise solution that is acceptable to most of us, and serves the interests of Americans as best we can.”

end

Now the main stream media is going after the supposed Russian ads on Facebook.  These ads were supposedly trying to sway the election towards Trump.  The problem is that Russian authorities claim no responsibility for the ads and also claim that they would not even know how to place those ads etc..courtesy zero hedge)

“Russia Hoax Continues”: Trump Blasts Facebook Ad Frenzy; Hits “Fake News” For “Screaming” For Hillary

Continuing his early morning tweetstorm, Donald Trump on Friday questioned the recent media focus on Facebook’s decision to overhaul how it handles political advertisements amid investigations into alleged Russian interference in U.S. elections, and called reports of Kremlin-linked groups buying Facebook ads to sway the 2016 election part of a “Russia hoax.”

“The Russia hoax continues, now it’s ads on Facebook. What about the totally biased and dishonest Media coverage in favor of Crooked Hillary.”

 Follow

Donald J. Trump ✔@realDonaldTrump

The Russia hoax continues, now it’s ads on Facebook. What about the totally biased and dishonest Media coverage in favor of Crooked Hillary?

In a subsequent tweet, Trump also slammed reports that pro-Russian groups used Facebook ads to influence voters in his favor during the 2016 election, and questioned why no attention was paid to the “fake news media’s” bias in favor of “crooked” Hillary Clinton.

“The greatest influence over our election was the Fake News Media “screaming” for Crooked Hillary Clinton. Next, she was a bad candidate!“

 

 Follow

Donald J. Trump ✔@realDonaldTrump

The greatest influence over our election was the Fake News Media “screaming” for Crooked Hillary Clinton. Next, she was a bad candidate!

Earlier, Kremlin spokesman Dmitry Peskov said on Friday that Moscow had nothing to do with political advertisements on Facebook that were allegedly aimed at influencing the 2016 US presidential election

“We do not know … how to place an advert on Facebook. We have never done this, and the Russian side has never been involved in it,” Peskov told a conference call with reporters.

The statement was in response to Facebook’s report that a Russian agency had purchased some ads on the social network during the 2016 presidential campaign. Facebook co-founder and Chairman Mark Zuckerberg said on Thursday that the company is “actively working with the US government on its ongoing investigations into Russian interference.”

Facebook previously told investigators it discovered some 3,000 political ads published on its platform over the past two years which were reportedly linked to fake accounts based in Russia. Alex Stamos, Facebook’s chief security officer, made the revelation in a blog post Wednesday. Stamos said that 470 inauthentic accounts spent about $100,000 to buy roughly 3,000 ads. He added that the accounts have since been suspended. On Thursday Facebook announced it would turn over the ads to Congressional investigators.

The company also said that it “will help government authorities complete the vitally important work of assessing what happened in the 2016 election.” “We are looking into foreign actors, including additional Russian groups and other former Soviet states, as well as organizations like the campaigns, to further our understanding of how they used our tools.”

END

It seems that Cuba used a new Sci Fi weapon at USA diplomats which caused hearing loss and memory loss and other debilitating effects.  USA plans a strong response:

(courtesy Mac Slavo.SHFTPlan.com)

US Manufacturing “An Increasing Drag On The Economy” As PMI Drops For First Time Since March

by Tyler Durden

Sep 22, 2017 9:53 AM

3

SHARES

Following a stronger-than-expected Eurozone PMI print this morning, Markit reports a mixed bag for preliminary September US PMIs with Manufacturing limping higher but Services missing expectations and slipping notably. After 5 straight months of gains, the US Composite PMI dropped back below pre-election levels.

As Markit notes, there were signs of underlying fragility in September, with new orders expanding at one of the slowest rates seen over the past year.

Latest data also indicated that new export sales remain close to stagnation.  

Despite the ongoing collapse of ‘hard’ economic data, ‘soft’ surveys continue to remain hopeful…

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“The US economy showed encouraging resilience in a month of hurricane disruption. Although the September surveys indicated a moderation in growth of business activity, the overall rate of expansion remained robust. Historical comparisons of the PMI with GDP indicate that the surveys point to the economy growing at an annualised rate of just over 2% in the third quarter.

“Similarly, the overall rate of job creation remained solid, historically consistent with non-farm payrolls rising by 180,000 in September.

“The biggest impact of Hurricane Harvey was evident in manufacturing supply chains, where resultant supply shortages were a key driver of higher prices. Supply delays were the most widespread in two and a half years, while input price inflation rose to the highest since 2012.

“The manufacturing sector, which was already struggling in August, consequently acted as an increasing drag on the economy, leaving services as the main growth driver. The survey is consistent with a slight deterioration in comparable official manufacturing output data.

“While repair work in the aftermath of Hurricane Harvey may boost short-term business activity in coming months,a drop in business optimism about the year ahead suggests that companies have become less confident in the longer-term outlook.

end

A little difficult to understand  but the upshot of Kaplan’s comments is that the Fed may not have anymore room to raise rates as the economy will buckle over on two or three small rate rises

(courtesy zerohedge)

Fed’s Kaplan Makes A Stark Admission: Equilibrium Rate May Be As Low As 0.25%

As we have hammered away at for years, “the math doesn’t work”, and it appears The Fed just admitted it.

In a stunning admission that i) US economic potential is lower than consensus assumes and ii) that the Fed is finally considering the gargantuan US debt load in its interest rate calculations, moments ago the Fed’s Kaplan said something very surprising:

• KAPLAN SAYS NEUTRAL RATE MAY BE AS LOW AS 2.25 PCT, LEAVING FED “NOT AS ACCOMMODATIVE AS PEOPLE THINK”

Another way of saying this is that r-star, or the equilibrium real interest rate of the US (calculated as the neutral rate less the Fed’s 2.0% inflation target), is a paltry 0.25%.

What Kaplan effectively said, is that with slow secular economic growth and ‘fast’ debt growth, there’s only so much higher-rate pain America can take before something snaps and as that debt load soars and economic growth slumbers so the long-term real ‘equilibrium’ interest rate is tamped down. It also would explain why the curve has collapsed as rapidly as it did after the Wednesday FOMC meeting, a move which was a clear collective scream of “policy error” from the market.

This should not come as a surprise. As we showed back in December 2015, in “The Blindingly Simple Reason Why The Fed Is About To Engage In Policy Error“, when calculating r-star, for a country with total debt to GDP of 350%…

… The equilbirium real rate is around 0.4-0.6% at most, certainly below 1%, and as low as 0.30%.

Furthermore, as Deutsche Bank’s Dominic Konstam said almost two years ago, “One might argue for low “implied” equilibrium short rates via debt ratios. For example, if nominal growth is 3 percent and the debt GDP ratio is 300 percent, the implied equilibrium nominal rates is around 1 percent. This is because at 1% rates, 100% of GDP growth is necessary to service interest costs.

In this case, real growth would slow in response to rate hikes because productivity would stay weak at full employment and companies would be profit/price constrained around paying higher wages.

Moreover, nominal growth would then slow even more than real growth does because inflation would fall to 1 percent or below.

To be sure, the Fed hinted as much two days ago, when on Wednesday it lowered its longer-run federal funds rate to 2.75% from 3.00%. Another hint came last week from the BOC which, together with Bill Dudley, hinted it was willing to considering changing its mandate, i.e. lowering the inflation target, thereby unlocking some potential upside to the Real Interest Rate.

In the meantime, however, the mere fact that another Fed president is once again hinting that r-star is far lower than consensus, is an indication that the central bank is very limited in how much more tightening it can pull out this cycle. The simple math is that if Kaplan is right, the Fed has at most 3 more hikes left before it prompts yield curve inversion and another recession.

Expect to hear much more on this now that the r-star genie is out of the bottle. Finally the other consideration is that with the Fed once again talking about cutting the neutral rate, is means that not only is tightening approaching its end, but that the Fed may soon be forced to ease, by either cutting rates or QE.

Which also explains the second part of Kaplan’s statement: that the Fed is not as “accomodative as people think.” That is basically the Dallas Fed president jawboning risk assets lower, an implied warning that the market is not appreciating how close to capacity the economy currently is. Of course, the question why stocks aren’t dropping is best left to the ECB and BOJ…

Then again, maybe this time the market will notice, as LT yields are finally starting to move.

end

David Stockman on the economy:  he gives it 3 months before the crash starts:

(courtesy David Stockman/Daily Reckoning)

Trump’s Now ‘Blowing Kisses to Janet Yellen’

David Stockman joined Fox Business network to discuss his latest analysis on the economy, the political

Stuart Varney started his segment noting that David Stockman is traditionally bearish toward the market and continues to miss out on the Dow rally as it hit an all-time high. Varney began his entry to the former Reagan economic official by stating that if he had listened to Stockman, he would’ve lost out on significant earnings. Stockman began by reverberating, “If you had taken my advice in March 2000, you would’ve dodged a bullet. You could’ve taken my advice in November and dodged another bullet.”

“We have a Federal Reserve, the U.S central bank, that is responsible for creating repeated bubbles that last seven or eight years. This one we’re in has gotten to the point of absurdity. The market is trading at 24 times reported earnings at the 100-month point in the business cycle. Nobody has outlawed a recession. It is going to happen. The market will crash.”

When asked how he can continue to make such remarks when there is a cycle of recession Stockman remained level. He noted, “when the pullbacks come they remain at 20, 30 or 40%.”

Varney, in either negligent or confused tone, then asked what the point of warning of such a threat was if he could not get a specific time period. Stockman remained focused noting, “I cannot predict what the Federal Reserve is going to do. I cannot predict a black swan. I can predict that there’s an orange haired swan heading right the financial system right now. Washington is going to be in chaos within two or three months.”

Stockman went on to warn that Donald Trump was a threat to the market and a destabilizing factor.

The Fox Business host prompted the former Reagan official on what Trump could do to produce such a devastating crash.  Stockman, in clear and sober fashion, leveled, “He’s done nothing right. He’s wasted nine months. The top one, two and even three things wrong and hurting America today falls to the Federal Reserve. He was blowing kisses to Janet Yellen. She’s a menace. She should’ve been asked to resign in January.”

“Second, he should’ve got the budget under control. He is now going to preside over the biggest increase in the national debt in the history of the United States.”

“Third, he should be trying to bring in the expansionist, imperialist foreign policy. He said he would do it during the campaign. Instead of working with Putin and greater relations, he’s running away. Now he is focused on the North Koreans, the Iranians and everyone else. We don’t need another war – we’re bankrupt.”

After being pushed from Varney, who seemed to be in a perplexed mood by the sober speaking, Stockman looked directly into the camera to urge clear and collected thinking. “Sell the bonds. Sell the stocks. Get out of this market. It is a dangerous casino. You have maybe 5% upside and a 40% downside.”

“The risk-reward ratio is terrible. We have a government that is out of control. We have a Federal Reserve that is making dead promises. Put it in cash or anywhere safe – but get it out of Wall Street.”

When asked by the Fox Business host how he could make such claims while others are still making considerable gains in the market, the former Reagan official continued the course. “Good for you on the gains. On the other hand, just because “the world did not end” at this moment today, it does not mean that there is not another drop to fall.”

“I hope you are ready for the crash when it drops because you’re going to have to get out of the way of the thundering crash. Why won’t there be, when you have a market that is so overvalued. Instances of this craziness can be seen in stocks like Netflix that is currently trading at 220 times earnings. It is nothing but a cash burning machine.”

Switching gears the host then went on to ask case specifically for the scenario that Stockman warns of. He began by asking whether Microsoft was in on the craziness. “Microsoft is a little more reasonable. It is trading around the same level it was in 2000 despite the fact that trading is up four times and earnings are up five times. Good companies get massively overvalued during bubbles.”

When asked about his views toward the big tech companies, including Facebook, Apple, Amazon, Netflix and Google (FAANGS), the best-selling author did not turn away from his bearish position. “While I don’t have a big view on Apple, what I do know is that most of the FAANGS, including Facebook, are way overvalued.”

“This market is crazy. This is a classic mania. This is fantasy land. While you smile, you would’ve been doing the same thing at the top of the bubble in March 2009 when everyone was saying ‘this time is different.’ But this time it is worse.”

“The Federal Reserve has nowhere to go. It has already announced that it would be normalizing its books, shrinking the balance rate and raising rates. The European Central Bank (ECB) will follow. The Bank of Japan is now lost. We have a world economy that is in very rough shape. I don’t understand why people don’t see that.”

Find the full interview with David Stockman on Fox Business discussing Janet Yellen’s Federal Reserve, and more here.

Thanks for reading,

David Stockman
for The Daily Reckoning

END

Let us wrap up the week with this offering courtesy of Greg Hunter of USAWatchdog

(courtesy Greg hunter/USAWatchdog)

Bad & Good News on North Korea, Obama Wiretapped Trump, Economic Update

By Greg Hunter On September 22, 2017 In Weekly News Wrap-Ups

There is bad news and good news about the tensions between North Korea and the U.S. First, the bad news. President Trump threatened to “destroy North Korea” if the country continues on its nuclear path and tests more ballistic missiles. North Korea says they will deal with President Trump “with fire.” Now, the good news. China has agreed to enforce stricter sanctions on North Korea (NK) through its banking system. The U.S. has called on China to cut off North Korea from doing business with China’s biggest banks. That doesn’t mean the problem is solved, but it is a huge step by China to curtail NK’s missile testing by cutting down on the flow of cash going into North Korea.

Remember when President Trump said that the Obama Administration “wiretapped” him in Trump Tower? CNN called Trump a “liar” and said his accusations were “baseless.” This week, CNN, among other mainstream media outlets, had to eat their words and admit that Donald Trump and Trump Tower in New York City were, in fact, wiretapped before and after the election. The so-called Russian collusion story falls apart a little more every day, and that is also good news.

The Federal Reserve Head Janet Yellen spoke this week and told the world that low inflation numbers were a “mystery.” Gregory Mannarino of TradersChoice.net says there is no “mystery,” and the Fed knows it. Mannarino contends, “The economy is dead in the water, and the Fed cannot admit it.” That’s why there is low inflation at the moment.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

(To donate to USAWatchdog.com Click Here)

Video Link

https://usawatchdog.com/bad-good-news-on-north-korea- obama-wiretapped-trump-economic-update/

end

that about does it for tonight