Friday’s $2 Trillion Plunge: Biggest Single Day Equity Market Loss Ever

The $2.08 trillion wiped off global equity markets on Friday after Britain voted to leave the European Union was the biggest daily loss ever, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987, according to Standard & Poor’s Dow Jones Indices.
Global markets skidded following the unexpected result from the June 23 referendum, in which Britons voted to withdraw from the EU by a 52 percent to 48 percent margin.
Markets in mainland Europe were hit the worst, with Milan . FTMIB and Madrid . IBEX each down more than 12 percent for their biggest losses ever. Britain’s benchmark FTSE 100 . FTSE was down nearly 9 percent at one point on Friday, but rallied to close down 3.15 percent.
The route started in Asia, with the Nikkei . N225 down 7.9 percent, and carried over into Wall Street as the S&P 500 fell 3.6 percent.
Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital LLC in New York, said the severity of the sell-off was partly due to investors misreading the outcome and betting the wrong way.

This post was published at David Stockmans Contra Corner on June 27, 2016.

Brexit Is Just The Beginning: A Tidal Wave Of Popular Revolt Against The Ruling Elites

Now that Britain has done the unthinkable and voted to leave the European Union, the critics are ruthless in their condemnation of Prime Minister David Cameron for his ‘irresponsible act’ in calling the referendum in the first place.
As if it were his fault.
As if he was responsible for the bloated Brussels bureaucracy and undemocratic governance structure in the EU.
As if he were to blame for the domination of an unequal union by a German chancellor responsive and accountable only to her own domestic political concerns.
Yes, Cameron will step down, as political accountability in a parliamentary system demands. He miscalculated and lost big time, staking his political future on a Remain vote.
It was Martin Wolf, the prestigious columnist for the Financial Times, who last month labeled the referendum on a British exit from the EU – widely known as Brexit – as ‘the most irresponsible act by a British government in my lifetime.’
The nerve of the leader of one of the world’s oldest democracies to actually let the voting public decide the future of the nation.

This post was published at David Stockmans Contra Corner on June 26, 2016.

Brexit Wins: Why That’s Great News for Europe, Too

British voters have elected to leave the European Union in a national referendum. The UK Independence Party (UKIP) leader Nigel Farage declared Friday Britain’s ‘independence day.’ That is quite a statement given British history. A little over two and a quarter centuries ago, America had its own first Independence Day, and the British Empire was the super-state from which Americans declared independence.
History has come full circle; in a sense, today we are seeing the American Revolution in reverse. In many ways, the European Union is a lever of US global hegemony. By seceding from the EU in spite of threats from Washington, Britain is declaring partial independence from America.
It must be noted that independence is not isolation. This is the key distinction that is intentionally blurred by the ‘Better Together’ rhetoric of the ‘Remain’ camp. When they scaremonger about ‘leaving Europe,’ it conjures images of Britain abandoning Western civilization. But ‘the West,’ as in the US-led alliance of neocolonial powers, is not the same thing as Western civilization. And the European Union is not the same thing as Europe. Exiting a mega-state in defiance of an imperium is not withdrawing from civilization. In fact, such an exit is propitious for civilization.

This post was published at David Stockmans Contra Corner on June 25, 2016.

BREXIT’s Article 50 of Lisbon Treaty

One of Britain’s Liars-In-Chief, David Cameron, pretended to take then high road by offering his resignation, but then proceeded down the low road by refusing to enforce Article 50 of the Lisbon Treaty to get Britain’s BREXIT vote to leave the elite’s faux- political union, created for and by unelected political hacks who would otherwise be unemployable elsewhere.
Taking the Nike’s 1988 advertising slogan, ‘Just Do It,’ Cameron refuses to admit in words what he proves in action: he is out of touch with the nation’s people he is supposed to represent, and instead, only takes those actions that serve the elite’s political union.
Cameron lacks the responsibility in leading Britain by refusing to ‘Just Do It’
Be prepared for Britain’s governmental sycophants to act in concert with the EU political sycophants to undermine BREXIT. They will backhandedly conspire to invoke the Eagles’ Hotel California lyrics, ‘You can check out any time you like, but you can never leave.’
Here is the simplicity of Article 50. Watch the complexity with which it may never be enforced.

This post was published at Edge Trader Plus on June 25, 2016.

The British Referendum and the Long Arm of the Lawless

‘Kings have long arms, many ears, and many eyes.’ So read an English proverb dated back to the year of our Lord 1539. And thus was born an idiom that today translates to the very familiar Long Arm of the Law. It stands to reason that such a warning was born of feudal times when omnipotent and seemingly omnipresent monarchs personified the law, possessed of reach, eyes and ears against any and all nefarious souls who dare defy and attempt an escape into thick, ancient forests under dark cover of night.
Today we use the very descriptive and accurate idiom with little thought as to how it came to be a part of our modern language. The credit should go to Charles Dickens for bringing that borrowed but altered expression forward in time. It was he who first coined and made use of the phrase, ‘the strong arm of the law,’ in his debut novel, 1836′s The Pickwick Papers. This satire opens a window onto life as lived in mid-nineteenth century England. It is through humor rather than judgement that Dickens appeals to and gives readers a glimpse of their true characters as they stand on the precipice of the Victorian Age.
Suffice it to say that many Britons today yearn for a time when hopefully fair and just monarchs, or later, elected officials, were the only lawmakers with whom they need comply. That bygone world starkly contrasts with the Britain of today, where the electorate finds itself being rigorously governed by the Bank of England (BoE), a deeply intrusive institution whose strictures may as well be law.

This post was published at David Stockmans Contra Corner by Danielle DiMartino Booth ‘ June 22, 2016.

Brexit Stress Mounts in Funding Markets as Dollars Become Scarce

Money markets are flashing warning signals as rising credit risk, spurred in part by fears of Brexit, makes it harder for big banks to obtain U. S. dollar funding.
A gauge of bank borrowing costs – the FRA/OIS spread – hit the most extreme level since 2012 on Thursday, and the premium to swap foreign currencies into dollars reached the highest since late last year as deteriorating investor sentiment ahead of Britain’s June 23 referendum on European Union membership strained the financial system.
The latest bout of turmoil illustrates how regulatory changes introduced after the financial crisis are leading to greater volatility in episodes of stress. Banks, facing higher costs to make markets, aren’t stepping in as they did in the past to take advantage of arbitrage opportunities in funding markets, leading to bigger price movements.

This post was published at David Stockmans Contra Corner on June 17, 2016.

Meltdown! Central Banks Are Destroying The Global Bond Market

Japanese, German and Swiss bond yields fell to records, as government debt around the world extended its best gains in two decades, with the prospect of Britain leaving the European Union boosting demand for havens.
Federal Reserve Chair Janet Yellen fueled the rally by saying Wednesday slow productivity growth and aging societies may keep interest rates at depressed levels. Fewer Fed officials expect the central bank to raise interest rates more than once this year than they did three months ago, based on projections the central bank issued. The Bank of Japan said inflation in the nation may be zero or negative, while holding monetary policy unchanged.
The bond rally is sending benchmark 10-year yields to unprecedented levels in some countries. Japan’s tumbled to minus 0.21 percent. Australia’s fell below 2 percent. Germany’s plunged below zero. Even Switzerland’s 30-year yield briefly turned negative, as sub-zero yields, once considered unthinkable, are becoming more common.
‘New Abnormal’
‘It’s the new abnormal,’ said Park Sungjin, the head of principal investment in Seoul at Mirae Asset Securities Co., which oversees $7.7 billion. ‘The abnormal is normal now.’

This post was published at David Stockmans Contra Corner on June 16, 2016.

Ambrose Evans-Pritchard: Why I Am Voting For Brexit

With sadness and tortured by doubts, I will cast my vote as an ordinary citizen for withdrawal from the European Union.
Let there be no illusion about the trauma of Brexit. Anybody who claims that Britain can lightly disengage after 43 years enmeshed in EU affairs is a charlatan, or a dreamer, or has little contact with the realities of global finance and geopolitics.
Stripped of distractions, it comes down to an elemental choice: whether to restore the full self-government of this nation, or to continue living under a higher supranational regime, ruled by a European Council that we do not elect in any meaningful sense, and that the British people can never remove, even when it persists in error.
For some of us – and we do not take our cue from the Leave campaign – it has nothing to do with payments into the EU budget. Whatever the sum, it is economically trivial, worth unfettered access to a giant market.
We are deciding whether to be guided by a Commission with quasi-executive powers that operates more like the priesthood of the 13th Century papacy than a modern civil service; and whether to submit to a European Court (ECJ) that claims sweeping supremacy, with no right of appeal.
It is whether you think the nation states of Europe are the only authentic fora of democracy, be it in this country, or Sweden, or the Netherlands, or France – where Nicholas Sarkozy has launched his presidential bid with an invocation of King Clovis and 1,500 years of Frankish unity.

This post was published at David Stockmans Contra Corner by Ambrose Evans-Pritchard The Telegraph ‘ June 12, 2016.

Sterling Volatility Explodes To Record High As Brexit Looms

With two polls being unleashed on the markets today indicating the largest lead for Brexit over Bremain yet with regard the UK referendum, it seems FX traders at least have begun to wake up to the short-term uncertainties a “leave” vote may entail. A short-term measure of expected price swings for the pound climbed for a third week astraders sought protection as two-week implied volatility, a period that covers the June 23 voting date, closed at its highest on record today.
With just 13 days left, things are not looking good for Cameron and his cronies…
U. K. Poll on EU Shows 45% Remain, 55% Leave: ORB/Independent “LEAVE” ON 53 PCT, “REMAIN” ON 47 PCT BEFORE BRITAIN’S EU REFERENDUM – SKY NEWS And it is having an effect…

This post was published at Zero Hedge by Tyler Durden – Jun 10, 2016.

Even France Shuns Europe as Brexit Revolt Spreads

France has turned even more viscerally eurosceptic than Britain over recent months, profoundly altering the political geography of Europe and making it impossible to judge how Paris mightrespond to Brexit.
An intractable economic crisis has been eating away at the legitimacy of the French governing elites for much of this decade. This has now combined with a collapse in the credibility of the government, and mounting anger over immigration.
A pan-European survey by the Pew Research Center released today found that 61pc of French voters have an ‘unfavourable’ view, compared to 48pc in the UK.
A clear majority is opposed to ‘ever closer union’ and wants powers returned to the French parliament, a finding that sits badly with the insistence by President Francois Hollande that ‘more Europe’ is the answer to the EU’s woes.
‘It is a protest against the elites,’ said Professor Brigitte Granville, a French economist at Queen Mary University of London. ‘There are 5000 people in charge of everything in France. They are all linked by school and marriage, and they are tight.’

This post was published at David Stockmans Contra Corner on June 8, 2016.

Politics Do Matter – -Business Heading Into Lockdown Mode As Anti-Establishment Insurgencies Gain

It’s all about uncertainty. From the now very real prospect of a Trump presidency to the still greater likelihood of Brexit – which could in turn trigger a domino effect of Eurosceptic rebellion across Europe – rarely has the political landscape looked quite so turbulent, unpredictable and therefore threatening to economic stability as it does now.
What even just a few weeks ago had been regarded by markets as little more than tail risks are all of sudden real and present ‘dangers’. The breakup of the European Union, Donald Trump in the White House – these things may actually happen, and indeed seem to be getting more probable by the day.
With most economies still struggling to return to pre-crisis norms, and the business cycle in many of them already quite long in the tooth, uncertainty about the political future has again soared up the list of key business concerns, causing many companies to go into lock down mode.
Normally, recessions are caused by over-heating, and consequent central bank action to jack up interest rates. But with rates already at close to zero, and no sign whatsoever of a boom, this seems to be an economic cycle which almost uniquely could simply die of the political turmoil threatening to engulf it.
Don’t think that at least in Britain, the uncertainty will lift once the referendum is out of the way. Absent of an overwhelming Remain vote, which seems very unlikely, the referendum will resolve nothing. A narrow vote for remain will only further harden the divisions within the ruling Tory Party, making gainful government, whose wafer thin majority has already repeatedly fallen victim to backbench rebellion, all but impossible.

This post was published at David Stockmans Contra Corner on June 8, 2016.

Open Letter to the Guardian

The Guardian headline is supporting government propaganda that 9 out of 10 economists warn of a dire future if Britain exits the EU. For a newspaper who published Snowden, I would expect a lot more integrity on this issue. The Guardian is reporting propaganda on a grand scale. They reported that ‘Some 72% [of economists] said that a vote to leave would most likely have a negative impact on growth for 10-20 years.’
The propaganda implies that economic growth in Britain has benefited from the EU single market since it joined in 1973. Let us expose the lies and corruption propagated by this pool of economists. Using the government’s own statistics from the Office for National Statistics, annual economic growth for Britain peaked BEFORE it joined the EU and has been declining ever since. This forecast that leaving the EU will have a negative impact on British economic growth is clearly a bunch off lies. Annual economic growth for Britain has fallen ever since it joined the EU in 1973. Each rally produced a lower economic growth peak.
This is the end of Britain if it remains in the EU and the media will not tell the truth or expose what is going on all to save the jobs of bureaucrats at the expense of their own families (feel free to forward this article to everyone). The British pound peaked against the dollar in 1864. It has been a bear market long-term. If the pound simply now closes below 14600 for 2016, it will fall to make new historic lows well under par to the dollar seen back in 1985.

This post was published at Armstrong Economics on May 30, 2016.

Cameron Gets Clobbered – -300 British CEO’s Back Brexit

More than 300 business leaders are calling on Britain to vote to leave the European Union, saying that the country’s ‘competitiveness is being undermined by our membership’.
In a letter published in the Telegraph, the business leaders say that Brussels’ ‘red tape stifles every one of Britain’s 5.4 million businesses’ and claim that a Brexit would allow them to ‘create more jobs’.
Signatories of the letter include Peter Goldstein, a founder of Superdrug, Steve Dowdle, the former vice president Europe of technology firm Sony, David Sismey, a MD of Goldman Sachs and Sir Patrick Sheehy, the former chairman of British American Tobacco.
The letter is also signed by hundreds of people linked to small and medium-sized businesses. In total the backers of the letter are from businesses employing hundreds of thousands of members of staff.
It will be seen as an attempt to redress the balance after the Bank of England and the International Monetary Fund last week warned that a Brexit would damage Britain’s economy.
It came as:

This post was published at David Stockmans Contra Corner on May 17, 2016.

No Apologies Required: The Roots of Capitalism

For many years,’ John Chamberlain writes in his book The Roots of Capitalism,’the system we call capitalism was on the defensive. It existed in the here-and-now, and its imperfections, whether inherent or not, were plainly apparent to everybody.
‘Socialism, on the other hand, was something to be attained in the future, a thing of shining colors wrapped in the gossamer tissue of a dream. Its imperfections, if there were to be such, were still concealed in the womb of time. When contrasted with a dream of perfection, capitalism was manifestly at a disadvantage.
‘But,’ Chamberlain goes on, ‘with the advent of socialist economies (Communist Russia, China) and the semi-socialist, or ‘mixed,’ systems of Scandinavia, Britain, and New Deal America (to say nothing of the ‘national’ socialisms of Nazi Germany and Fascist Italy), capitalism no longer requires apologists.’
Capitalism’s superiority, in hindsight, is obvious: Capitalism doesn’t require force, murder or concentration camps as a matter of policy in order to attain the desired result.
Yet, many seem to think that an economic system based on private trade is the primary cause of corruption, widespread malfeasance and manmade disaster. Quick question: When’s the last time a Chipotle cashier kicked down your door and served you a burrito bowl, extra guac, at gunpoint?
Now, as we shift the binoculars to the public sector for a moment, try not paying land rent (property taxes) for a few years. Then board up those windows before the capitalists in business suits show up at your door with guns.

This post was published at Laissez Faire on Apr 29, 2016.

When Wall Street Made A Country – -The Rise Of Panama

This goes back a long way. The Panamanian state was originally created to function on behalf of the rich and self-seeking of this world – or rather their antecedents in America – when the 20th century was barely born.
Panama was created by the United States for purely selfish commercial reasons, right on that historical hinge between the imminent demise of Britain as the great global empire, and the rise of the new American imperium.
The writer Ken Silverstein put it with estimable simplicity in an article for Vice magazine two years ago: ‘In 1903, the administration of Theodore Roosevelt created the country after bullying Colombia into handing over what was then the province of Panama. Roosevelt acted at the behest of various banking groups, among them JP Morgan & Co, which was appointed as the country’s ‘fiscal agent’ in charge of managing $10m in aid that the US had rushed down to the new nation.’
The reason, of course, was to gain access to, and control of, the canal across the Panamanian isthmus that would open in 1914 to connect the world’s two great oceans, and the commerce that sailed them.

This post was published at David Stockmans Contra Corner on April 11, 2016.

Why Germany’s Growth Engine Falters: Exports To The Bubble Economies – -China, EM, Petro-States and Russia – -Are Dropping

FRANKFURT – China is cutting back on mining machinery as its economy slips. The United Arab Emirates and other Middle Eastern countries are no longer awash in oil money, putting luxury car brands at risk. Russia, still facing Western sanctions, cannot buy as much high-tech energy equipment.
The downshift in the emerging markets is leaving Germany vulnerable – and, by extension, Europe.
As many businesses in the region struggled just to tread water in recent years, German companies prospered by selling the goods and technology that emerging countries needed to become more modern economies. As they did, Germany’s strength served as a counterweight to the economic malaise, financial turmoil and Greek debt drama that dragged down many European countries.
Now, Germany, which accounts for the largest share of the European economy, is looking like the laggard. Compared with the economies of other countries in the region, Germany’s has been more deeply tethered to emerging markets. And the political climate is only adding to the uncertainty, as Germany deals with a wave of migrants and a potential exit of Britain from the European Union.
Against that backdrop, the country’s export engine is sputtering, while business confidence is eroding.

This post was published at David Stockmans Contra Corner on April 6, 2016.

Brits Have The Debt Addiction, Too – -Household Borrowing Binge has no End in Sight

Britain’s credit binge has no end in sight as weak pay growth and low interest rates encourage households to load up on debt, official forecasts show.
The Office for Budget Responsibility (OBR) said UK households were on course to spend more than they earned for the rest of the decade.
Such a long period of households living so far beyond their means would be ‘unprecedented’, the fiscal watchdog said.
Households are expected to spend 58bn more than they earn this year, rising to 68bn by the end of the decade.
This is up from respective deficit forecasts of 41bn and 49.2bn in November. The OBR said data suggested spending had ‘significantly outpaced the growth of labour income’ at the end of last year.
Consumers are expected to raid their savings to fuel consumption growth. Borrowing over the next five years would also be supported by the Bank of England’s ‘extremely accommodative monetary policy’.

This post was published at David Stockmans Contra Corner on March 18, 2016.

How a Brexit Could Save Europe from Itself

It is those who love Europe, its diversity, its history and its humanity who should be the most enthusiastic about Brexit. A paradox? Not at all. TheEuropean Union, as currently constituted, has run out of road. It is doomed to fail, sooner or later, with catastrophic consequences for our part of the world, and the only way forward is for one major country to break ranks and show that there can be a better alternative consistent with Europe’s core enlightenment values.
It would be far better if we, rather than a more socialist or nationalistic country, were the first to break the mould: Britain would have the opportunity to show that free trade, an open, self-governing society and a liberal approach could ensure the peace and prosperity at the heart of the European dream. Others would soon join us. If we vote to stay, we will lose the moral authority to speak out, and other, less benign, inward-looking, illiberal approaches may triumph instead.
The eurozone is broken, and another, far greater economic crisis inevitable. The next trigger could be a fiscal meltdown in Italy, or another banking collapse, or a political implosion in Spain or France, or another global recession. Nobody can be sure what the proximate cause will be – but there will be one, and the fallout will be turmoil of a far greater magnitude than anything we saw in Greece. At the same time, the tensions fuelled by the migration crisis will grow relentlessly, especially if hundreds of thousands or even millions of people are settled across the continent over the next few years.

This post was published at David Stockmans Contra Corner on March 10, 2016.

The Public Is Being Looted By Privatization And Deregulation – Paul Craig Roberts

The privatization movement and the deregulation movement have turned out to be failures.
Privatization in Britain under the Thatcher government had its origin in the belief that the absence of incentivized managers and shareholders with a stake in the bottom line resulted in nationalized companies operating inefficiently, with their losses covered by government like the big private banks’ losses today. Thatcher’s government believed that privatizing socialized firms would reduce the UK budget deficit and take pressure off the British pound.
Today privatization is a way that governments can reward cronies by giving them valuable public resources for a low price. When the UK government privatized the postal system, there were news reports that one postal property in London alone was worth the purchase price of the entire postal service.
Privatization is also a way that conservatives, who object to social pensions and national health, can stop ‘taxpayer support of welfare.’ In the US conservatives want to privatize Social Security and Medicare. In the UK conservatives want to privatize the National Health System.
It looks like the UK Conservative government is taking a step in the direction of privatizing the national health system, one of the great social reforms in British history.

This post was published at Paul Craig Roberts on February 23, 2016.

Washington’s Comedy Of Terrors: When In Doubt, Bomb (The Remnants Of) Syria

Poor ISIS. Try as they might, the men in black still can’t out-terrorize their enemies or, more pointedly, even their patrons. For the past three years, decapitations have served as the money shots for ISIS’s theater of cruelty. Then on New Year’s Day the Saudis upstaged ISIS by audaciously chopping off the heads of 47 men, including a prominent Shia cleric.
This act of brazen butchery is made all the more horrific by virtue of the fact that the Saudi head-slicers recently landed a seat on the UN Human Rights Council, largely at the insistence of British Prime Minister David Cameron, who personally vouched for the petro-autocracy’s acute sensitivity to matters of civil liberties and the humane treatment of prisoners. Then again the drone-troika of Britain, France and the U. S. also enjoy seats on the council, so perhaps the Saudis have earned their slot after all.
With his peculiar fondness for porcine heads, Cameron is probably the Kingdom’s most un-kosher ally, but he is far from Saudi Arabia’s only political cheerleader. Showing a stunning lack of judgment, Comandante Bernie Sanders says his Syrian strategy relies on the Saudis taking the lead in the fight against ISIS. ‘They’ve got to get their hands dirty,’ Sanders inveighed to Wolf Blitzer on CNN. ‘They’ve got to get their troops on the ground. They’ve got to win that war with our support. We cannot be leading the effort.’

This post was published at David Stockmans Contra Corner on February 13, 2016.