Quote of the Day: The Euro, the EU and the European Central Bank are Doomed

From the legendary investor, author, libertarian philosopher, anarcho capitalist Doug Casey at the International Man:

The economy of the European Union is a constipated, sclerotic, malfunctioning entity that only registered real economic growth of 0.2% in the recent quarter—assuming you can credit their numbers at all. The continent is a giant monument to socialism, where everyone believes they can live at the expense of everyone else. As a result, the average European sees his government as a magic cornucopia, a source of unlimited wealth. When something goes wrong, Europeans look to their governments to “do something.” With this in mind, European Central Bank President Mario Draghi made the front pages by saying he is “ready to act” with a “whole menu of monetary policy instruments.”

This is central banker speak for “I’m willing to print an incredible amount of money in my attempt to keep my job and stimulate the economy by making people think they’re richer than they really are.”

Draghi’s money printing is a disastrously misguided attempt at creating prosperity. It will create bubbles, and cause people and companies to do all manner of things they’d never consider without the false economic signals he will send. If printing money were the path to prosperity, Zimbabwe and Venezuela would be the richest countries on earth instead of economic basket cases.

Traders who take positions based on the words of a central banker are naïve, and just asking for losses. Not only does the ECB believe printing money is a good thing, but they’re forced to do more, to keep the system from collapsing. This will send the value of the euro much lower; the currency will accelerate its descent toward its intrinsic value, namely zero.

The euro is a sure bet to join the ranks of many hundreds of defunct paper currencies. Not one currency in today’s world is backed by a commodity (like gold); they’re backed only by confidence (which can vanish like a pile of feathers in a hurricane). And, of course, the ability of governments to steal from the people. But the euro doesn’t even have that going for it. The European Union doesn’t have the power to tax. Right now, the Eurocrats in Brussels really only have the power to regulate. I’ve long said, “While the U.S. dollar is an ‘IOU nothing,’ the euro is a ‘who owes you nothing.’”

The EU itself is a completely artificial and dysfunctional union. The Swedes are very different from the Sicilians, and the Portuguese very different from the Austrians. These people have little in common besides a history of fighting with each other. Force them together into a phony union and they’ll become mutually resentful, the way the Germans and the Greeks now are. The EU was put together partly to avoid future wars, but it may turn out to be a war incubator.

The European Union itself makes no real sense. Its sole good aspect, the abolition of internal barriers to the free passage of goods and people, could have been had simply by dropping barriers. Setting up another huge, costly bureaucracy in Brussels was idiocy.

Incidentally, people think of these countries—Italy, France, Germany and so on—as though they are fixtures in the cosmos. But they aren’t. In their current forms, they’re all newcomers on the stage of history.

The average person doesn’t realize that the country we know as Italy today was only created in 1861, a consolidation of many completely independent and very different entities that had been separate states since the collapse of the Roman Empire. Germany was only unified in 1871, out of scores of principalities, dukedoms, baronies and whatnot. Both unifications were very bad ideas; World Wars I and II are just at the head of a long list of reasons why that’s true. Even today, there are separatist movements in big Western European countries, like the Basques and Catalans in Spain, and the Scots in the United Kingdom, who wish it weren’t quite so united. There are many others.

Centripetal force will eventually tear it apart, with the EU as a whole disintegrating long before its individual parts—France, Italy, Germany the U.K., etc.—fall apart. The colors of the map are always running.

The European continent reminds me of that poorly managed cruise ship that sank off the coast of Italy in 2012. It is dying financially, with all the debt bankrupting governments, businesses and individuals. It is sinking economically, weighted down with stifling regulations and taxes. It is being strangled demographically, with birth rates far below replacement. Except among African and Muslim immigrants, who are not integrating. And now, millions of migrants, who seem to expect free food, shelter, clothing and money to hang around coffee houses all day to complain. Europe has long been a hotbed of religious, ethnic and race wars—quite frankly, I see the next one building up right now.

So, I think the euro will reach its intrinsic value long before the dollar does. The euro, in anything like its present form, will likely cease to exist within a decade, and probably far sooner. If I had a lot of my wealth in euros, I would get it out ASAP.

Headlines of the Day: Nikkei Asia Pushes Back on BoJ's Negative Interest Rates

Well, below seems a curiosity: headlines from one of mainstream media have been pushing back on BoJ policies! 

From today's Nikkei Asia Review's Capital Markets

From yesterday's Nikkei Asia Review's Trends 

Growing signs of fragmentation or fissures within the establishment?

Quote of the Day: The Texas Boom Bust Oil Economy

Writes analyst Wolf Richter at the Wolfstreet.com

This money was drilled into the ground. It was used to build office towers for the booming energy sector and everything that came along with it, such as law firms and engineering firms. It was used to build apartment towers. It drove technology forward and funded innovation. It bought equipment. It fed manufacturers that supplied the oil industry. It paid for the construction of hotels and temporary housing for oil workers even in small towns….

And along the way, the money paid for wages, salaries, bonuses, and royalties, and folks went out and spent this money.

The state government was ecstatic with this influx of cash. Retailers were even more ecstatic and opened new stores. Mall owners were happy. Banks bathed in bliss and extended huge loans to drive this miracle to the next level. Consumers were expressing their happiness by feeding retail profits and state coffers alike.

Retail sales recycled the money and contributed to the strong Texas economy. Everything went right – until the price of oil plunged.

Now oil and gas companies are going bankrupt. Manufacturers and service providers that supply the oil and gas industry are sinking into the mire. People are getting laid off, from retail workers to high-level engineers in the energy sector. And sagging retail sales indicate that these folks, and others around them, are closing their wallet or that they’ve maxed out their credit cards after losing their jobs.

Tax collections on motor vehicle sales and rentals had experienced an even greater boom. From the first half of 2010 to the first half of 2015, they’d soared 65%! Car dealers were on cloud nine! But that boom too is now imploding, with tax collections in January for December sales dropping 3.8% year over year!

And commercial real estate is getting hit. Debt is everything in the sector. So this is going to be a problem for banks. The entire math is based on high rental rates and low vacancy rates. But in Houston, rental rates are falling and vacancy rates are skyrocketing. Sublease space has spiked 69% and continues “to sit on the market,” even while new towers are being completed. “See-through buildings” are re-appearing — that infamous phenomenon of vacant and transparent buildings dotting Houston’s business district during the last oil bust. So watch the banks. 

Infographics: How Inflationism Led to the Collapse of the Roman Empire

Money as medium of exchange accounts for half of almost every conducted social transactions  So the abuse of money will not only have unintended economic consequences but likewise social and political ones.

The Visual Capitalist's Money Project shows how inflationism played a principal role in the collapse of the Roman Empire.

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

At its peak, the Roman Empire held up to 130 million people over a span of 1.5 million square miles.

Rome had conquered much of the known world. The Empire built 50,000 miles of roads, as well as many aqueducts, amphitheatres, and other works that are still in use today.

Our alphabet, calendar, languages, literature, and architecture borrow much from the Romans. Even concepts of Roman justice still stand tall, such as being “innocent until proven guilty”.

How could such a powerful empire collapse?

The Roman Economy

Trade was vital to Rome. It was trade that allowed a wide variety of goods to be imported into its borders: beef, grains, glassware, iron, lead, leather, marble, olive oil, perfumes, purple dye, silk, silver, spices, timber, tin and wine.

Trade generated vast wealth for the citizens of Rome. However, the city of Rome itself had only 1 million people, and costs kept rising as the empire became larger.

Administrative, logistical, and military costs kept adding up, and the Empire found creative new ways to pay for things.

Along with other factors, this led to hyperinflation, a fractured economy, localization of trade, heavy taxes, and a financial crisis that crippled Rome.

Roman Debasement

The major silver coin used during the first 220 years of the empire was the denarius.

This coin, between the size of a modern nickel and dime, was worth approximately a day’s wages for a skilled laborer or craftsman. During the first days of the Empire, these coins were of high purity, holding about 4.5 grams of pure silver.

However, with a finite supply of silver and gold entering the empire, Roman spending was limited by the amount of denarii that could be minted.

This made financing the pet-projects of emperors challenging. How was the newest war, thermae, palace, or circus to be paid for?

Roman officials found a way to work around this. By decreasing the purity of their coinage, they were able to make more “silver” coins with the same face value. With more coins in circulation, the government could spend more. And so, the content of silver dropped over the years.

By the time of Marcus Aurelius, the denarius was only about 75% silver. Caracalla tried a different method of debasement. He introduced the “double denarius”, which was worth 2x the denarius in face value. However, it had only the weight of 1.5 denarii. By the time of Gallienus, the coins had barely 5% silver. Each coin was a bronze core with a thin coating of silver. The shine quickly wore off to reveal the poor quality underneath.

The Consequences

The real effects of debasement took time to materialize.

Adding more coins of poorer quality into circulation did not help increase prosperity – it just transferred wealth away from the people, and it meant that more coins were needed to pay for goods and services.

At times, there was runaway inflation in the empire. For example, soldiers demanded far higher wages as the quality of coins diminished.

“Nobody should have any money but I, so that I may bestow it upon the soldiers.” – Caracalla, who raised soldiers pay by 50% near 210 AD.

By 265 AD, when there was only 0.5% silver left in a denarius, prices skyrocketed 1,000% across the Roman Empire. Only barbarian mercenaries were to be paid in gold.

The Effects

With soaring logistical and admin costs and no precious metals left to plunder from enemies, the Romans levied more and more taxes against the people to sustain the Empire.

Hyperinflation, soaring taxes, and worthless money created a trifecta that dissolved much of Rome’s trade. The economy was paralyzed.

By the end of the 3rd century, any trade that was left was mostly local, using inefficient barter methods instead of any meaningful medium of exchange.

The Collapse

During the crisis of the 3rd century (235-284 A.D), there may have been more than 50 emperors. Most of these were murdered, assassinated, or killed in battle.

The empire was in a free-for-all, and it split into three separate states.

Constant civil wars meant the Empire’s borders were vulnerable. Trade networks were disintegrated and such activities became too dangerous.

Barbarian invasions came in from every direction. Plague was rampant.

And so the Western Roman Empire would cease to exist by 476 A.D.

And people today think that doing the same stuff like the Romans did would have a different repercussion.

Courtesy of: The Money Project

Guest Post: Essential Search Engine Optimization Tips for 2016, Optimize Images for Web Development

Allow me to move away from finance for this post.

Here are two articles on on website maintenance development as submitted by Chris Patterson for SEO Specialista 

Essential Search Engine Optimization Tips for 2016 

Search engine optimization involves a regarding techniques that improve the actual of traffic to your website from google, yahoo, bing, ask, and similar matters. The higher your own website ranks in google, easier for readers to find you and click through your site. This will give your own site an adequate amount of web presence and increases your site's reputation. Give consideration to tips and methods to get you going.

In Search engine marketing techniques you can't forgot about optimizing your own website body. In most subpage create unique title of and also and meta. Also include your main keywords all on the site, include in h1, h2, h3, initially and end of information. Good tip is also bold chief keywords, search engine spiders will give more points if your keyword are bolded.

The blog title must contain the main promises keywords of course. The blog title is a phrase that tells what your blog post is surrounding. It is like the description tag on the web page but it describes your blog. Every page may link into the main page with these keywords the actual anchor text. This will help greatly to raise the search engine ranking for these keywords. 

Link building is 2016 seo tips important as the web engine provides ranking based on link inspection. Increase your site's link popularity by a person's internal and incoming attaches.

You should learn where you're ranking right now, assuming possess to currently began some Seo in your web site. There are still resources that you could use to quickly display you Website SEO audits. There are rank checkers, and because your title proposes it will show you exactly where you're presently ranking. You will also discover website analytics which Google currently gives free tools. It exhibits the quantities of your website from a lot of guests you're obtaining each and every day to which pages are truly popular.

Search engines are greatly subjected to optimized content material in operating of your website when using descriptive title tags adequately. Use no higher than 60 characters, because most search engines won't display content past the period. They favor the first 60 characters, as well, giving less weight to words past that.

Optimize Images for Web Development

It is crucial to fulfill SEO guaranteeing that Search Engines will feel your website is important and deliver it to people searching (i.e. your potential customers) Whatever target for most is to arrive at the number one spot in Google, regarded course there are more search engines as well, and attacking the 1 spot in that person is essential.

NOW google can look at a image that is named leather jacket, and will rank it higher for that key word than just IMG123.jpg. But you want set every detail into it for maximum SEO images Website.

Adding an image in internet page could enhance affliction of expense. These images could easily optimize your web site using image alt tags. It is a very appealing factor since you could include planet keywords in it. The downside quite could be marked as spamming if you do not do it right, but this could easily be avoided. Just be sure to such as a word using a relative term to the topic, a keyword maybe a word that defines firm and include it with words like graphic or image.

Why To Use Alt Tags

At a minimum, you want to fill in the alt text field.

Not including the “alt tag” is one of the most common SEO mistakes I see new website owners make.

This is sloppy SEO for two reasons:

Search engine robots can’t read images without text, plus you’ve missed a keyword opportunity.

Not labeling images is a poor user experience for those who have disabled images in their browsers or for those with visual or certain cognitive disabilities.

“Alt text” stands for “alternative information.” According to the World Wide Web Consortium (W3C), the “alt” attribute specifies an alternate text for user agents that cannot display images, forms or applets. For example, the user agent Googlebot cannot “see” images directly. Instead, it relies on the information in the alt attribute to determine what the image is and what to display in search results.

Your text should describe what the image is about and be limited to 10 words or less. This text does not have to be a sentence but more a descriptive, keyword-rich phrase. If the image doesn’t fit the theme of your post or page, then you might want to reconsider your image choice.

Going forward, remember to include keywords in the image file name and use different ones in both your alt and title attributes.

Phisix 6,850: Team Viagra Strikes Again!

Only in the Philippines has it been where the stock market indices have been subjected to frequent injections of (marking the close) Viagra.

Only in the Philippines has been where the establishment harbors on the illusion of attaining of a first world country status but yet has to depend on price fixers to prop the stock market index

Also only in the Philippines has been where the establishment feverishly try to paint them as ‘moral’ and 'legal' but seem to find themselves blindsided when it comes to the gaming/massaging/manipulation of the stock markets.

28.42% of today’s PSEi's gains came from last minute ingestion of Viagra!

While the last minute price fixing was likewise seen in the holding and the industrial sector, it was the pump at the property sector that delivered the meat of the last minute pump!

About 53% of the Property Index gains accrued from price fixers!

Three PSEi and property index issues benefited from the closing Viagra pump.

Prices provide informational content on the economics of the stock markets. Specifically, prices are supposed to represent the fundamentals (discounted stream of future cash flows) of securities traded at the exchange.

Manipulation of prices, thereby, translates to the distortions in the communication of such vital information which leads to misinformation.

And considering that price fixing has been a regular phenomenon here, then the massive deformation of price signals postulates not only to the gross mispricing of securities and the stock markets in general, but also reflects on the immense imbalances that have been accumulated by firms that have been misled by easy policies to engage in massive capital consumption activities.

The latest financial tremors have already been indications that economic reality will reassert control. And price fixing will only exacerbate on the return of liquidation phase.

Apparently, British author Aldous Huxley’s warnings has always reverberated: That men do not learn very much from the lessons of history is the most important of all the lessons that history has to teach.

(charts/graphs above from Bloomberg, colfinancial and technistock)

Signs of Coming Tighter Capital Controls: Ban on Cash; Board Game Monopoly Bans Cash

Panic. Desperation.

There has been no clearer signs of panic and desperation by governments to gain greater access of the public’s funding, through, not only of the necessity of Negative Interest rates (NIRP), but most importantly, to prevent any escape from NIRP via the war on cash.

So aside from the crescendoing advocacy by establishment experts to ban cash, they have even initiated the conditioning of the public through cash bans on the popular board game the “Monopoly” 

From the Independent

Monopoly-makers Hasbro have declared war on cheating players everywhere with their latest edition of the game.

Monopoly Ultimate Banking does away with cash entirely.

Instead, players scan cards using a tiny ATM machine.

Monopoly made the move to speed up the game, which is famous for taking several hours if many players are involved.

But it will also prevent cheaters from secretly stashing away fistfuls of notes to spring on other players.

The "tiny ATM" featured in the Ultimate Banking edition of the game is able to scan bar codes on each player's credit card, property cards and chance cards.

To buy a property, players scan their credit card and the property card and the price is deducted from their funds. Players also pay "rent" to one another when they land on a hotel by scanning property and credit cards.

Condition the public first. When popular resistance fades, implement.

Sovereignman’s Simon Black sees such a trend as a dire writing on the wall, Mr Black warns (bold mine)

This is starting to become very concerning.

The momentum to “ban cash”, and in particular high denomination notes like the 500 euro and $100 bills, is seriously picking up steam.

On Monday the European Central Bank President emphatically disclosed that he is strongly considering phasing out the 500 euro note.

Yesterday, former US Treasury Secretary Larry Summers published an op-ed in the Washington Post about getting rid of the $100 bill.

Prominent economists and banks have joined the refrain and called for an end to cash in recent months.

The reasoning is almost always the same: cash is something that only criminals, terrorists, and tax cheats use.

In his op-ed, Summers refers to a new Harvard research paper entitled: “Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes”.

That title pretty much sums up the conventional thinking. And the paper goes on to propose abolishing, among others, 500 euro and $100 bills.

The authors claim that “without being able to use high denomination notes, those engaged in illicit activities – the ‘bad guys’ of our title – would face higher costs and greater risks of detection. Eliminating high denomination notes would disrupt their ‘business models’.”

Personally I find this comical.

I can just imagine a bunch of bureaucrats and policy wonks sitting in a room pretending to know anything about criminal activity.

It’s total nonsense. As long as there has been human civilization there has been crime. Crime pre-dates cash. And it will exist long after they attempt to ban it.

Perhaps even more hilarious is that many of these bankrupt governments have become so desperate for economic growth that they now count illegal drug activity and prostitution in their GDP calculations, both of which are typically transacted in cash.

So, ironically, by banning cash these governments will end up reducing their own GDP figures.

What’s really behind this? Why is there such a big movement to ban something that is used for felonious purposes by just a fraction of a percent of the population?

Cash, it turns out, is the Achilles’ Heel of the financial system.

Central banks around the world have kept interest rates at near-zero levels for nearly eight years now.

And despite having created massive bubbles and enabled extraordinary amounts of debt, their policies aren’t working.

Especially in Europe, the hope of stoking economic growth (and even the sickening goal of inflation) has failed.

So naturally, since what they’ve been trying hasn’t worked, their response is to continue trying the same thing… and more of it.

Interest rates across the European continent are now negative.

Japanese interest rates are now negative.

And even in the United States, the Federal Reserve has acknowledged that negative interest rates are being considered.

They have no other choice; raising rates will bankrupt the governments they support and derail any fledgling economic growth.

Look at how low interest rates are in the US– and yet 4th quarter GDP practically ground to a halt. They simply cannot afford to raise rates.

As global economic weakness continues to play out, central banks will have no other option but to take interest rates even further into negative territory.

That said, negative interest rates will be the destruction of the financial system.

Because sooner or later, if banks have to pay negative wholesale interest rates to each other and to the central bank, then eventually they’ll have to pass those negative rates on to their customers.

Many banks have already started doing this, especially on larger depositors.

We’ve seen this in Europe where some banks charge their customers negative interest to save money, and in some extraordinary circumstances, pay other customers to borrow money.

It’s total madness.

There’s a certain point, however, when interest rates become so negative that no rational person would hold money in the banking system.

Eventually people will realize that they’re better off withdrawing their money and holding physical cash.

Sure, cash doesn’t pay any interest. But it doesn’t cost any either.

If you have a $200,000 in your savings account at negative 1%, you’d have to pay the bank $2,000 each year.

Clearly it would make more sense to buy a safe and hold most of that money in cash.

Problem is, the banks don’t have the money.

For starters, there’s literally not enough cash in the entire financial system to pay out more than a fraction of all bank deposits.

More importantly, banks (especially in the US and Europe) are extremely illiquid.

They invest the vast majority of your deposit in illiquid loans or securities of dubious long-term value, whatever the latest stupid investment fad happens to be.

And many banks have been engaging in a substantial balance sheet shift, rotating bonds from what’s called “Available for Sale” to “Hold to Maturity”.

This is an accounting trick used to hide losses in their bond portfolios. But it also means they have less liquidity available to support bank customer withdrawal requests.

The natural side effect of negative interest rates is pushing people to hold money outside of the banking system.

Yet it’s clear that a surge of withdrawal requests would bring down that system.

Banks don’t want that to happen. Governments don’t want that to happen.

But since central banks have no other choice than to continue imposing negative interest rates, the only logical option is to ban cash and force consumers to hold their money within the banking system.

Make no mistake, this is absolutely a form of capital controls. And it’s coming soon to a banking system near you.

From indirect (inflationism) to direct confiscation (wealth tax, bank deposit haircuts, forex and market controls, NIRP and war on cash). 

And such intensifying signs of panic and desperation are indications why the world is headed for a crisis bigger than 2008

Quote of the Day: The Phrase “Consumption-Based Economy” as Commonly Interpreted is Bass-ackwards

Professor Don Boudreaux at the Cafe Hayek debunks a populist myth used to justify state interventionism: 

The phrase “consumption-based economy” as commonly interpreted is bass-ackwards. Consumption in an economy no more fuels that economy than does success at driving a car fuel that car. Just as success at driving a car is the result of a working engine that is properly fueled with gasoline and accurately steered by a driver, success at consumption is the result of a working economy properly fueled by competition and accurately steered by market prices.

Put differently, ability to consume as lavishly as we Americans consume is the result rather than the cause of our prosperity. The economy must enable and encourage us first to produce things before we can consume things. Trying to consume greater quantities simply by increasing spending does no more to create the economic wherewithal to produce these greater quantities than does trying to travel further in a car simply by pressing harder on the accelerator create the fuel necessary for the longer journey.

Yet in a very important sense our economy is – and should be – consumption-based. It is and should be consumption-based in the sense that it is geared to satisfy the demands of consumers rather than the interests of producers. As Adam Smith said, “[c]onsumption is the sole end and purpose of all production; and the interests of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer.”* It follows that Mr. Trump and others who would forcibly obstruct consumers’ ability to trade with foreigners are enemies of the consumption-based economy, properly understood, and, hence, enemies also of the widespread prosperity that respect for such consumer sovereignty generates. 

* Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations (1776), Book IV, Chapter 8, para. 49.

Infographics: All of the World’s Stock Exchanges by Size

The Visual Capitalist presents the world's stock exchanges by size

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

There are 60 major stock exchanges throughout the world, and their range of sizes is quite surprising.

At the high end of the spectrum is the mighty NYSE, representing $18.5 trillion in market capitalization, or about 27% of the total market for global equities.

At the lower end? Stock exchanges on the tiny islands of Malta, Cyprus, and Bermuda all range from just $1 billion to $4 billion in value. Even added together, these three exchanges make up just 0.01% of total market capitalization.

The Trillion Dollar Club

There are 16 exchanges that are a part of the “$1 Trillion Dollar Club” with more than $1 trillion in market capitalization. This elite group, with familiar names such as the NYSE, Nasdaq, LSE, Deutsche Borse, TMX Group, and Japan Exchange Group, comprise 87% of the world’s total value of equities.

Added together, the 44 names outside of this aforementioned group combine for just $9 trillion, or 13%, of the world’s total market capitalization.

Northern Dominance

From a geographical perspective, it is the Northern Hemisphere that is dominant. North America and Europe both hold 40.6% and 19.5% respectively of the world’s markets, and the vast majority of Asia’s 33.3% lies north of the equator in places like Shenzhen, Hong Kong, Tokyo, and Shanghai.

Notable exchanges that are south of the equator include the Australian Securities Exchange, the Indonesia Stock Exchange, the Johannesburg Stock Exchange and the Brazilian BM&F Bovespa.

Notes on Data

Our information in this data visualization comes from the World Federation of Exchanges monthly report from November 2015. It is also worth noting that the London Stock Exchange (and its subsidiary Italian exchange) announced that it was leaving the WFE in 2013. Therefore, we retrieved the data on the LSE and the Borsa Italia from their website market reports, and converted the local currencies into USD.

Courtesy of: The Money Project

Quote of the day: Property Rights Provide Their Owners And The Things They Own With a Lot of Additional Value

Property rights are a universal right enshrined in the US Constitution and the United Nations Charter. Indeed, it is in search of just such rights that many of the world’s poor are motivated to cross borders into countries like the US.

For those living in the richest parts of the world, it is easy to take clear property rights for granted. But the reality is that only 2.3 billion people have the documents to protect and leverage their rights – including approximately one billion people living in Japan, Singapore, and the democratic West, and another billion in certain developing countries and former Soviet states.

Documentation is not just a bureaucratic stamp on a piece of paper. It is crucial to economic progress and inclusion. The reason the undocumented have an interest in being properly documented – whether they know it or not – is that clear property rights provide their owners and the things they own with a lot of additional value.

In the US or Europe, for example, a house not only serves as a shelter; it is also an address that can identify people for commercial, judicial, or civic purposes, and a reliable terminal for services, such as energy, water, sewage, or telephone lines. Documentation also allows assets to be used as financial instruments, providing their owners with access to credit and capital. If you want to take out a loan – whether you are a mining company in Colorado or a Greek shoemaker in New York – you must first pledge documented property in one form or another as a guarantee.

As I have shown elsewhere, the poor of the world are in possession of some $18 trillion of undocumented assets in real estate alone. But those assets will never attain their full value if they are not documented. As it stands, they cannot be used to raise capital. Nor can they be joined with other assets to create more complex and valuable holdings.

This is from an essay authored by Hernando de Soto, President of the Institute for Liberty and Democracy, published at the Project Syndicate

Headlines of the Day: China's Substance Abuse: Credit Growth and Non Performing Loans Zoom to Records as External Trade Crashes!

This critical news has just been in, Chinese credit growth in January 2016 zoomed to a record high...

Read article from Bloomberg

The other day, curiously, economic data reported a shocking collapse in both exports and imports during the same month or in January 2016...

Read article from CNBC

And yesterday, media told us that China's Non Performing Loans (NPL) last December also rocketed to milestone highs

Read article from Bloomberg

So let me ponder on what these headlines seem to say.

Slowing economy means MORE non performing loans.

But to solve the problem of non performing loans brought about by a slowing economy means to gorge on MORE DEBT!

So I get it.

Solve the problem of substance addiction with more substance abuse! And hope that the problem of addiction will just go away!

Headlines of the Day: Hong Kong and Singapore's Hissing Property Bubbles

Both images from Bloomberg...

See article here

See article here

Another Dead Cat’s Bounce: Japan Equity Benchmarks Soar Nikkei 7.2%, Topix 8.02%!

It’s interesting to see how media selects their headlines so as to create maximum impact for viewership attraction…

Since Japan’s Topix outperformed the Nikkei today, it garnered the headline.

Last September 9 2015 when the Nikkei outperformed the Topix, the Nikkei 225 got the headline. 

The common denominator, " the biggest gain since October 2008" --as if this has any meaning at all.

So following last week’s three session 11.1% crash, bulls mounted another major rebellion to push Japanese stocks, led by the Topix and the Nikkei, to post today's titanic rally

So what spurred the rally? Well here is the Bloomberg’s account: (bold mine)

Stocks soared in Tokyo, with the Topix posting its biggest gain in more than seven years, as investors judged shares had been oversold and a report showing Japan’s economy shrank more than expected last quarter boosted the outlook for central bank stimulus.

The Topix surged 8 percent to 1,292.23 at the close in Tokyo, its best gain since October 2008, after plunging 13 percent last week. The Nikkei 225 Stock Average jumped 7.2 percent to 16,022.58 as the yen weakened for a second day. U.S. markets rebounded on Friday to halt the longest losing streak since September. Chinese mainland markets reopen Monday after a week long holiday during which global stocks fell into a bear market.

“Japan is massively oversold,” said Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia Ltd. “Everyone is scrambling to get back in. Long-only investors are coming in along with retail and hedge funds. Plus, I would say there’s a lot of short covering going on. Also, U.S. shares rallied and we have China’s market back on today.” …

A report Monday showed Japan’s economy shrank 1.4 percent in the fourth quarter on an annualized basis, more than economists’ forecast for a 0.8 percent contraction.

So who knew: shrinking GDP equals monster rally! Bad news is good news! That’s aside from short covering and severely oversold conditions.

More…

BOJ Speculation

The yen capped its biggest two-week rally since 1998 on Friday, intensifying speculation the Bank of Japan may intervene to arrest gains that threaten to undermine almost three years of monetary stimulus. Finance Minister Taro Aso said Friday the government is watching market movements and will take any action necessary. Following a regular meeting with Abe, BOJ Governor Haruhiko Kuroda said he also would watch market moves closely.

So the simplified annotation: shrinking GDP PLUS expectations of BoJ rescue EQUALS monster rally!

Whoever said that stocks have been about G-R-O-W-T-H???!!!! One won't need a CFA for this!

Last September when the Nikkei staged its 7.7% rally I showed this chart…

Those red arrows were the huge 5%+ upside moves by the Nikkei.

Apparently, the concentration of the distribution of those huge upside moves occurred during 1990-1994 bear market. From 1990-4, almost all accounts of huge gains eventually saw the Nikkei lower than when such rallies were made.

Here is the contemporary version: Another congregation or clustering of major one day ups (as well as downs).

Even with today’s colossal 7.2% upside spike, the Nikkei remains below all the recent past major rebounds: the September 9 monster 7.7% rally, the January 22nd 5.88% rebound and the two day 4.8% NIRP bounce.

This entails that if history should serve as a guide, then today’s huge 7.2% rally may just be another run of the mill ferocious dead cat’s bounce...

...that should soon sputter.