What Could Possibly Go Wrong

Why Suppressing Feedback Leads to Financial Crashes

"The suppression of feedback only dams up risks and imbalances: out of sight, out of mind. But the imbalances haven't vanished; they're piling up unseen in the system, where they eventually break out at the system's weakest point. Central-planning manipulation 'works' by closing all the safety valves of market feedback, creating a dangerous but politically appealing illusion of stability and 'growth.' But the consequences of removing or suppressing feedback are catastrophic longer term, as the imbalances and risks pile up unseen until they bring down the entire system." Continue reading →

Continue ReadingWhy Suppressing Feedback Leads to Financial Crashes

Why Suppressing Feedback Leads to Financial Crashes

"The suppression of feedback only dams up risks and imbalances: out of sight, out of mind. But the imbalances haven't vanished; they're piling up unseen in the system, where they eventually break out at the system's weakest point. Central-planning manipulation 'works' by closing all the safety valves of market feedback, creating a dangerous but politically appealing illusion of stability and 'growth.' But the consequences of removing or suppressing feedback are catastrophic longer term, as the imbalances and risks pile up unseen until they bring down the entire system." Continue reading →

Continue ReadingWhy Suppressing Feedback Leads to Financial Crashes

Washington’s Vampire Economy Thrives on Bloodshed

"The Wall Street Journal observes a new 'Gilded Age' for Washington, which has been 'a time of lush business profits fueled by government outsourcing and war.' Well-connected recent college graduates secure entry-level bureaucratic jobs that pay enough to support rentals that charge $3,000 a month. Military contractors like Northrup Gumman, corporate lobbying groups, and Wall Street firms bring in hordes of first-time home buyers, driving real estate values upward. This does much to explain the invincible indifference of the ruling class to our nation’s unfolding economic catastrophe." Continue reading →

Continue ReadingWashington’s Vampire Economy Thrives on Bloodshed

Botched circumcisions during initiation ritual kill 30 in South Africa

"Botched circumcisions killed 30 young men and landed almost 300 more in hospital during traditional initiation rites in a South African province, the health department said Sunday. The 30 deaths in rural Eastern Cape province occurred during the annual season when young males undergo a rite of passage into manhood. Ten other youths were hospitalised after being rescued from a forest on Sunday. 'The ten initiates’ private parts are rotten. They are badly damaged. Their condition is scary,' said spokesman Sizwe Kupelo. A further 293 young men were undergoing hospital treatment for dehydration, gangrene and septic wounds. Some had lost their genitals." Continue reading →

Continue ReadingBotched circumcisions during initiation ritual kill 30 in South Africa

Yippee! More Bank Runs in Our Future

"The recent financial crisis was not initiated by bank depositors scrambling to withdraw their funds. Rather it was precipitated by a 'run' among short-term lenders who had purchased banks’ commercial paper or lent money to banks through 'repos' (repurchase agreements). When these lenders suddenly tried to liquidate these assets by selling them or not renewing the loans, their actions deprived banks of the short-term funds that the banks had been using to finance their long-term lending and investments. In other words, federal deposit insurance no longer works to discourage or mitigate bank runs, because it does not cover short-term lenders." Continue reading →

Continue ReadingYippee! More Bank Runs in Our Future

The Real Story of the Cyprus Debt Crisis (Part 1)

"In July 1974, in the face of an airborne invasion backed by the armour of NATO member Turkey, 200,000 Greek Cypriot citizens ran from their homes with only the clothes on their backs. The Greek Cypriot armour and infantry were no match for the second largest standing army in NATO, equal in size to the British and French forces combined. The Greek Cypriots were easily routed. The victors conducted summary executions of thousands of their prisoners and threw some of the bodies down wells to hide their crimes. Yet so began the housing boom in Cyprus." Continue reading →

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Marc Faber: This Will End In Disaster

"With gold and silver plunging, the US dollar strengthening, and oil still above $100 a barrel, today Marc Faber told King World News this will 'end in disaster.' This is part I of a series of written interviews that will be released today on KWN in which Faber discusses the end game, government theft, how investors can protect themselves, gold, silver, bail-ins, central planner actions, global markets, and much more." Continue reading →

Continue ReadingMarc Faber: This Will End In Disaster

Can the Fed Become Insolvent?

"In light of my recent posts on Morgan Stanley’s analysis of this question–which show that a rise of less than a percentage point across the yield curve would render the Fed 'bankrupt'–let me direct you to my original Mises.org essay on this question. I walk through various hypothetical Fed balance sheets to show what we mean by saying it could become insolvent. Then, in this article I walk through the January 2011 change in accounting rules that was instituted so that technically, the Fed can’t have negative equity from a fall in its asset prices. It would, however, drive home to more people around the world just how screwy our 'modern' monetary system really is." Continue reading →

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Western governments set to target tech giants over tax avoidance

"Western governments are set to target a range of tax loopholes used by technology giants including Apple, Amazon as part of an international drive to tackle corporate tax avoidance, a draft action plan seen by Reuters said. Corporate tax avoidance has become a hot political issue following public outrage over revelations in the past year that companies such as Apple and Google had used structures U.S. and European politicians said were designed to minimize the amount of taxes paid. As governments struggle with large deficits following the financial crisis, lawmakers have said enough is enough." Continue reading →

Continue ReadingWestern governments set to target tech giants over tax avoidance

China signals will cut off credit to rebalance economy

"China said on Friday it would cut off credit to force consolidation in industries plagued by overcapacity as it seeks to end the economy's dependence on extravagant investment funded by cheap debt. The State Council said it would ensure credit kept flowing to businesses that it thought had competitive products, but it would work with banks to oversee a gradual winding down of other businesses. Friday's announcement was the latest sign that China's policymakers are determined to bring debt-fuelled expansion under control, after the central bank allowed a cash crunch last month that sent short-term lending rates to record highs." Continue reading →

Continue ReadingChina signals will cut off credit to rebalance economy