Survive In Chaos: June 2016

Thursday, June 23, 2016

Joke Of The Week: Fed Says All Major US Banks PASS Stress Test.

ZeroHedge

FED STRESS TEST

Did They account for Brexit?!?!?

Markets are Reeling- Gold up $82.00+ as I write!

Brexit will shake up the EU and we will see calls from other states to break free from the EU and this will intensify capitol flows into the imaginary safe haven of the US Dollar.

Zero Hedge: It's All OVER- BREXIT - Britain Leaves EU

Markets Are Crashing EVERYWHERE!!!

Update 12:15 PM - Turmoil...

Dow Futures are down 800 points from the post-close highs...

As Cable crashes to 30 year lows...

And Treasury yields crash to 2016 lows...

This is the 2nd biggest percentage drop in 10Y Yields ever...

Update 11:50 PM: And now comes the global market panic:

S&P 500 FUTURES TUMBLE 4.5 PERCENT, DOWN 99 POINTS
GOLD 1350
TREASURIES EXTEND GAIN; 10-YEAR YIELD DROPS BELOW 1.50%, 12 BPS FROM ALL TIME LOW
JAPAN'S 10-YEAR YIELD FALLS TO RECORD MINUS 0.215%
CIRCUIT BREAKER KICKS IN FOR NIKKEI FUTURES, TRADING HALTED FOR 10 MINS FOR JAPAN STOCK FUTURES
INDIA RBI SAID TO SELL DOLLARS TO CURB RUPEE'S DROP: TRADERS
EUR/CHF EXTENDS DROP BELOW 1.0700, FIRST TIME SINCE AUG. 2015

* * *

Update 11:38 PM: According to ITV, it's all over: Leave has won the referendum.

ITV News says Leave to win the EU referendum #EURef https://t.co/yNt4vR2LRH pic.twitter.com/JzuzRo6Oeb

— ITV News (@itvnews) June 24, 2016

And BBC and Sky both just called it too. And now, the crying begins.

Orlov: Negative Interest Rates Are Coming To America

From ClubOrlov

TUESDAY, JUNE 21, 2016

Dmitri Orlov

Negative interest rates are coming to America

Well, that didn't take long! Negative Interest Rate Policy appears to be a gift that keeps on giving.

Just a little while ago I wrote that, in essence, if the Federal Reserve wants to keep the financial party going a little bit longer, it will have to continue lowering interest rates to below zero, as this is the only way to keep broke debtors alive and prevent the gigantic debt bubble from imploding. And now we find out that the Federal Reserve has resolved any legal impediments (such as the Federal Reserve Act) that have kept it from doing just that.

To recap, negative interest rates are a way to pay debtors to hold onto their debt instead of defaulting on it or repudiating it, thus preventing the debt pyramid from pancaking and taking the entire financial system with it. But this effect is temporary, for at least two reasons.

First, negative interest rates are essentially a tax on savings, causing people to think of other ways to store their wealth: land, precious metals, boxes of brass knobs, what have you. In due course, money stops being regarded as wherewithal and starts being regarded as an unreliable way to conduct business.

Second, with a gigantic bubble in bonds now decades old and bond yields now going negative, it is a matter of time before the realization hits that negative-yield bonds are not any sort of safe haven. Their value is now strictly a matter of their market valuation, which can plummet the moment people decide to dump them, with no floor anywhere. After all, there are plenty of other ways to lose money, and negative-yield bonds are nothing special.

And so, what the flashing neon words on the wall seem to be saying is this: negative interest rates are on the way throughout the “developed world.” In due course, they will demolish any remaining value of the US dollar (along with other NIRP currencies, such as the Euro and the Yen, to mention a few). Also in due course, they will blow up the bond bubble, and impair the debt financing function of Western and Japanese banks and corporations. And once this happens, obtaining new credit will become problematic.

In turn, this financial collapse will cause problems with letters of credit and bills of lading, meaning that cargo will not be loaded on ships, and the ships won't sail, leading to shortages of imports, disrupted global supply chains, triggering the next stage: commercial collapse.

That, in turn, will cause the tax base to shrivel and tax receipts to drop precipitously, impairing the ability of governments to continue to function. (Countries that insist on stationing their troops around the world for no good reason will be affected especially badly.) And this will bring on political collapse: governments will have a hard time pretending that they still exist, never mind being able to demonstrate that they still matter.

At which point you will suddenly find yourself asking this: How far along are social collapse and cultural collapse where I am? Do I know who my people are, and will they stand up for me, and I for them, or is it every man, woman and omni/multi/homo/trans/nonsexual part-unicorn for him/her/itself? This is not some theoretical question, but a perfectly practical one.

For example, last New Year's eve in Cologne, Germany, a mob of around a thousand male migrants attacked and molested a large number of women. There were some German men on hand; did they defend their women? No, they didn't. Or take the recent incident in Orlando. Conspiracy theories aside, there were over 100 people there against one gunman. Did any of them rush the gunman? The first 10 might have gotten shot; but the next 10 could have piled on, dropped him to the floor and stomped on his neck, ending the incident. But that didn't happen, did it? Where was their killer instinct?

By way of contrast, consider the incident that took place in Murmansk, Russia, where some migrants that had been expelled from Norway for bad behavior started behaving impudently toward some Russian women at a night club. The local lads didn't like that at all. According to some reports, the police showed up when the situation was already well in hand, and did their best to show that they are no slouches either. Result: 18 rapey migrants ended up in the hospital, 33 in detention, all begging to be sent home. If you are thinking that these people aren't quite civilized, then perhaps you are right, but we need to further process this thought.