Saturday, July 31, 2010
Friday, July 30, 2010
Wednesday, July 28, 2010
Video: Oil spill in Michigan from Marshall resident
Video: Oil spill in Michigan from Marshall resident: "Watch the first-hand video from a Marshall resident of the oil spill that's flowing through the Kalamazoo River.
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Tuesday, July 27, 2010
Monday, July 26, 2010
Friday, July 23, 2010
Monday, July 19, 2010
Sunday, July 18, 2010
Friday, July 16, 2010
Wednesday, July 14, 2010
Trading Stocks? Pack Your Dramamine
Trading Stocks? Pack Your Dramamine: "
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A few days ago we discussed that the market no longer responds to any fundamentals but merely gravitates toward various chaotic 'strange attractors' now that HFT-driven stock trading patterns are merely Mandelbrotian fractals, with no rhyme or reason behind self-similar trading patterns and unprecedented record daily volatility. Today, David Rosenberg provides the following chart best capturing the minimum RDA of dramamine required to trade stocks: with 6% average swings in 12 distinct periods in 2010 alone, even with the market virtually flat for the year, it is no wonder retail investors have decided to say goodbye to stocks for ever. This is not a market in which anyone, including retail and institutional investors, with the possible exception a few momentum inducing algos, can generate any alpha. Period. And leveraged beta trades are a recipe for suicide for anyone except those with discount window access. Which is why very soon the only ones trading stocks will be the primary dealers and those who pay multimillion monthly collocation fees to the NYSE in hopes they can frontrun a trade here or there (oh and SEC, your inability to halt flashing a year after saying you would do so, continue to inspire confidence that you are on top of your corruption game).
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Tuesday, July 13, 2010
Monday, July 12, 2010
Friday, July 9, 2010
Wednesday, July 7, 2010
Tuesday, July 6, 2010
Monday, July 5, 2010
Sunday, July 4, 2010
Iran, Russia and the Real World Obama Cannot Change
Iran, Russia and the Real World Obama Cannot Change: "
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I have a frequent nightmare: In the year 2011, with the full support and complicity of their shadow ally, Russia, the Islamofascist regime in Tehran announces that they have developed a deliverable nuclear weapon(s). That any attempt by any nation to dismantle their program through military force or draconian economic sanctions will be viewed as an overt act of war. That they will view any such act of war as justification enough to deploy a nuclear weapon against Israel…regardless of what nation is behind the initial response.
They will cite classic anti-Semitic mantra, such as the myth that international Jewry controls the Western powers, etc. as their reasoning for labeling Israel the chief culprit by default. More to the point, when push comes to shove they know that President Obama harbors no love of the Jewish state (as his harsh treatment of Netanyahu shows) and will have no stomach for a war to protect it.
[Meanwhile the Russians let it be known through diplomatic back-channels that relations between Tehran and Moscow have recently thawed and any retaliatory military strike against Iran for its actions against Israel could be viewed as an attack on Russia.]
The West, assuming it is even motivated to respond at all, is now put in a precarious position for a now-nuclear Iran looms over the Strait of Hormuz like a Colussus. This narrow sea lane is by far the world’s most important oil chokepoint due to its daily flow of 16.5-17 million barrels, or roughly 40 percent of all seaborne oils (20 th percent of oil traded worldwide). At its narrowest point the channel is only 21 miles wide.
Now Obama will have a choice to make. Will he commit the US Navy to keep the strait open, call the Russian bluff and risk a world war? Or will he back down and seek a “diplomatic” solution. Regardless, even temporarily closing off the Persian Gulf would cause an economically devastating spike in the price of oil and a sympathy rally in all commodities.
This would be just fine for the commodity-rich Russia. With 79 billion barrels of proven reserves they hover above a vast reservoir of untapped crude oil. And let us not overlook natural gas. In fact, according to the EIA, Russia holds the world’s largest natural gas reserves, with 1,680 trillion cubic feet (Tcf), which is nearly twice the reserves in the next largest country which is, guess who, Iran. In 2006 Russia was not only the world’s largest natural gas producer (23.2 Tcf), but also the world’s largest exporter (6.6 Tcf). Russian government forecasts expect gas production to total 31.1 Tcf by 2030. Europe is highly dependent on Russian natural gas through the state-controlled Transneft pipelines they could close with the turn of a nozzle. The EU imports almost half of its natural gas and 30 percent of its oil from Russia. Eastern Europe consumes even higher percentages of Russian gas.
[As my dream moves along, I envision too that as a precursor to Iran’s announcement we see a sustained rally in oil futures before the eventual spike as Tehran will have given their new friends an ample heads-up allowing the barons of Moscow to go long futures as a hedge against what is coming and even profit from the appreciation should their cash business be temporarily dislocated from supply disruptions.]
The fact is the Russians have a vested interest in a nuclear Iran. It is good for business and certainly will greatly diminish the power and influence of the already hard-pressed USA. So even as Russian president Dmitry Medvedev offers lip-service to “limited” sanctions to an ever more bewildered Obama foreign policy team, the true powers in Russia—Putin and the band of hybrid statist/capitalist billionaire oligarchs—will never support effective economic measures that will hurt Iran enough to curb its nuclear ambitions. “The enemy of my enemy is my friend” is the old saying. And the Russians certainly do not look to as us partners…at best competitors, at worst impediments to their desires for expansion that date back into the dimmest past of the ancient tsars. Self-interest is the guiding principle among European nation-states. It always has been and always will be—“rock star” president notwithstanding.
[Meanwhile, as my nightmare unfolds, in another sea channel, the Chinese—who already have strong economic ties with Iran—coincidentally decide to launch a repeat of their bellicose 1996 naval exercises in the Formosa Strait almost within sight of the Taiwanese coast. What will the USA do? How will we treat this act of aggression half way across the world committed by the nation whose military might is formidable and even more prickly, holds much of our national debt and the value of our currency in a death grip?]
The America of my dream is thus weak and quite vulnerable. But this premonition need not come to pass. The first step towards thwarting this one potential future is for the Obama administration to do a re-“reset” in foreign relations and get a grip on who are our friends, who are our enemies, and start treating each accordingly. If Obama truly believes his own rhetoric that a nuclear Iran is “unacceptable” then he must see that we have with Israel a common and imperative goal to prevent Iran from obtaining nuclear weapons. If that means that he must give Israel tacit approval for a military strike with a quiet assurance that we will have their back regardless of what inevitable “condemnation” resolution come downs the UN pipeline then so be it. This is real world stuff here and the future of millions could be at stake. Hyperbole? Part of being a leader is having the capacity to imagine the unimaginable. 9/11 gave us a clue what a few hard-core Islamic zealots with box-cutters and no scruples can do. Just imagine this crowd with a nuke. Again, “unacceptable” means just that: we cannot accept it.
What Obama must accept is that our interests and those of much of the world are not aligned on this matter…either economically or politically. And thus must he find in himself the same “courage” that he conjured up to push through an unpopular healthcare bill at home because he, ahem, knew best, and this time do what is best for the world, whether that world knows it or not.
The fact is that the notion of a “global community” is a myth. Nations are what nations are. And a clue as to how they will conduct their affairs can usually be discerned by picking up a history book and thumbing through a page or two.
Iran is the geopolitical illustration of Newton’s first law of motion which offers that an object in motion will stay in motion on the same course until acted upon. It seems that in his desire to turn inward and create an economic utopia within our borders, Barack Obama is unwilling to accept that the world outside remains a very hazardous place. And there are many in that world who view the imminent decline of American power not as a symbol of a newfound global harmony, but rather an opportunity for mischief. If he stays on his relentless course of statism at home and post-American dogma abroad, Mr. Obama will end up irrevocably weakening this nation with unsustainable domestic activism and an utter misapprehension about the rough and tumble neighborhood in which his happy-faced diplomats are trying to navigate. He may very well get a new world order, that “change” of which he spoke so forcefully in his campaign. But I think the reality will not be so pleasant as his fantasy optimism would have him “hope.”
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Saturday, July 3, 2010
Friday, July 2, 2010
Hopefully This Chart Will Get Congress To Stop Squabbling About New Jobless Benefits
Hopefully This Chart Will Get Congress To Stop Squabbling About New Jobless Benefits: "
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There's not really much bright side to today's job numbers: a hefty drop in unemployment, but only because so many people left the labor force. With the withdrawal of the temporary census jobs, the economy actually lost 125,000 payroll positions in the latest report.
Our own Dan Indiviglio has a chart that shows what's been happening:
There's a small ray of sunshine with the creation of some private-sector jobs, but the numbers are really thin. If you look at the overall figures, it seems clear that we're just returning to a very dismal trend that was temporarily disrupted by the census hiring. And whatever you think of federal stimulus spending, it's pretty clear that it kept some people working by plugging holes in state budgets, so as that wave of money recedes, we can expect to see a lot of downward pressure on the employment figures as states and municipalities lay off workers. The news reports are already full of teacher layoffs.
Eventually, of course, we'll return to job growth, but expect that to take some time, especially with the economic aftershocks still rocking the world economy. If next month's numbers look this bad, it will be pretty bad news for Democrats, who had allowed themselves to hope that things might be turning around. But it will be really bad news for households who have to manage through a long, ugly stretch of unemployment. Hopefully, this will spur Congress to stop squabbling over jobless benefits.
Join the conversation about this story »
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With austerity all the rage around the world, sharp cutbacks to stimulus are going to hit global growth to the tune of 1.25 percentage points, the Institute of International Finance says; the second quarter will probably be the "high-water mark for growth over the next 18-24 months.”
With austerity all the rage around the world, sharp cutbacks to stimulus are going to hit global growth to the tune of 1.25 percentage points, the Institute of International Finance says; the second quarter will probably be the "high-water mark for growth over the next 18-24 months.”: "With austerity all the rage around the world, sharp cutbacks to stimulus are going to hit global growth to the tune of 1.25 percentage points, the Institute of International Finance says; the second quarter will probably be the "high-water mark for growth over the next 18-24 months.” 
1 comment!"
1 comment!"
Will Austerity Be The Catalyst For War?
Will Austerity Be The Catalyst For War?: "
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As always SocGen's Dylan Grice comes out with some tremendous insights in his latest weekly piece 'Double dips, siren calls and inflationary bias of policy.' While the gist of the piece is presenting a comprehensive overview of the traditional and cognitive biases toward inflationary policies and away from hard, unpopular, deflationary/austere measures, Dylan provides a chilling anecdote involving the 1980s conflict between the UK and Argentina, in which it was precisely war that pulled an extremely unpopular government, that of Maggie Thatcher, out of the gutter of public opinion, and soaring in popularity. Thatcher, who came to power oddly enough on a 'mandate to smash inflation, smash the unions and downsize government', saw her popularity immediately slide to 25% (see chart) as people realized the very real pain associated with austerity and a regime fighting run away government. A tangent in Grice's argument is that on very rare occasions, the people of a country do end up making the decision to take on hardship, instead of kicking the can down the road (are you listening Summers?). Yet they promptly grow to regret their decision. So what was it that saved the government, and allowed the Conservatives a second term in which to complete the painful austerity project? The declaration of war by Argentina's General Galtieri over the Falkland Islands. The result was soaring popularity for the Iron Lady, and the rest is history. Looking forward, now that all of Europe is gripped in austerity, and make no mistake - this very same austerity is coming to the US on very short notice (sorry Krugman), and popularity ratings for all political parties are crashing, has the political G-8/20 elite been focused a little too much on the Falkland war? Is war precisely the diversion that Europe and soon America hope to use in order to deflect anger from policies such as Schwarzenegger's imposition of minimum wage salaries yesterday (yes, this is pure austerity)? And is there a Gallup or some other polling 'unpopularity' threshold that the G-20 is waiting for before letting all those aircraft carriers parked next to the Persian Guld loose? Read the below excerpt from Dylan and make up your own minds.
From SocGen's Dylan Grice
How about the UK in the 1980s though? Wasn't Thatcher elected in 1979 on the back of a promise to bring down inflation, smash the trade unions and downsize government? In other words, wasn't Thatcher elected with a mandate for deflation, which demonstrates that sometimes electorates do elect governments to take tough decisions?
Strictly speaking, the UK in the early 1980s doesn't belong in the same category as Canada, Sweden and Finland in the early 1990s. It had lurched between crises in the 1970s the way an all-day drunk lurches between lampposts: inflation peaked at 25% in 1975; the IMF were called in 1976; the bleak 'winter of discontent' of 1978/79 saw widespread power cuts and widespread strike actions by, for example, rail engine drivers, lorry drivers and ambulance drivers.
More infamously, rubbish piled up in Leicester Square after Westminster Council allocated rubbish to be dumped there when refuse collectors went on strike, and coffins piled up in Liverpool after gravediggers went on strike. When asked what the council would do should the gravedigger strike continue Liverpool's Medical Officer said the decomposing bodies would probably have to be thrown in the sea! The gravediggers soon got what they asked for and the strike only lasted two weeks.
So when in 1979 the UK electorate voted in Thatcher on a ticket of painful deflation, the crises caused by a weak and out-of-control-government weren't simply abstract, as they are to most of us today. They were real, and it was in the midst of this chaos that Thatcher came to power.
However, despite winning a clear mandate to smash inflation, smash the unions and downsize government, her immediate reward for carrying out her election pledges was to be marked as the most unpopular prime minister in British political history and by early 1982 her approval rating had slumped to 25%. Despite having voted for Thatcher’s painful medicine and having even understood the need for it, UK voters in the “hot” state people inevitably feel when unemployment spikes had less tolerance for the bitter medicine than they thought they would have in the distantly “cold” state of May 1979.
Squealing with pain and begging for it to stop (364 economists - including former and future Nobel Prize winners - signed an open letter decrying Thatcher's plan to raise taxes in the depths of the 1981 recession to cut borrowing as having no basis in economic theory). Thatcher's chances of a second term to complete her project looked doomed...?
But Britain wasn't the only divided nation in need of social healing at that time. On the other side of the world the widely-hated Argentinian military dictatorship of General Leopoldo Galtieri was experiencing severe economic crisis and widespread social unrest of his own. And to deflect from his domestic problems he did what pressed tyrants have done since the beginning of time - he picked a fight with a foreigner he felt sure he could beat.
Located in the South Atlantic only 300 miles from Argentine shores but 8,000 miles from Britain, the tiny Falkland Islands has been a territory of the UK since it was appropriated from the Argentines in 1833 for its strategic value in navigating Cape Horn. Since this had rankled with generations of Argentinians (as it still does today), Galtieri calculated that an invasion would deflect from his disastrous domestic policies. He also calculated that the UK would balk at the military response required to defend the Islands. The Brits would be vastly outnumbered with implausibly long supply lines and, anyway, the islands were mainly inhabited be sheep.
And America was his new best friend too. Hadn't Reagan just warmly received him as a bulwark against communism in Latin America? Hadn't the administration's National Security Advisor just called him the 'majestic general'? Convinced that even if Thatcher wanted to retaliate, she'd be talked out of it by the Reagan administration, he launched a surprise invasion on 2 April 1982. And that morning, Galtieri must have felt pretty pleased with himself. And that morning, Galtieri must have felt pretty pleased with himself. Upon hearing the news, enthralled crowds of patriotic Argentines momentarily forgot the death squads, the 9,000 to 30,000 disappeared 'subversives', the daily grind of high unemployment and 130% inflation, and instead gathered outside Galtieri's balcony in a carnival-like atmosphere to celebrate and show their approval of the invasion. His plan was working like a dream.
But the tribal instinct is a part of the human condition, not only the Argentinean one, and the British public were equally thoroughly gripped by the same fervent collective delusion that we call 'national pride.' Galtieri had miscalculated. Thatcher did respond militarily. The British army - though outnumbered - were better trained and equipped than their foe, whom they dispatched within two months. In the national delirium of that rare episode in the terminal decline of what had once the world's largest empire - a national victory - Thatcher's approval rating, like that of her previously despised party, soared (see chart below). An election was called, duly won by the Conservatives, and the painful austerity project was completed in a second term. The rest, as they say, is history.
Thatcher has gone down as the iron lady who turned Britain around and transformed its fortunes. But how different would the story have been had it not been for the 'majestic general?' The Thatcher experience shows how fragile support for painful economic policies can be even when the democratic mandate for those polices has been won.
Like the Canadian and Scandinavian austerity experience in the 1990s, the painful programs adopted succeeded as much by luck as by political bravery. And this is what worries me. It's not that I'm ideologically wedded to one side or the other, it's that the precedents just aren't encouraging. The Weberists are right to worry exactly because the Krugmanites are right that the required austerity will be so deeply painful and politically risky. Policymakers won't make it happen, so the bond market will make it happen instead.
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Thursday, July 1, 2010
Gold Below $1,200 As Asset Liquidations Spread Like Wildfire
Gold Below $1,200 As Asset Liquidations Spread Like Wildfire
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