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Ukraine President’s interview and the subtext

November 19, 2015

Ukraine President’s interview and the subtext

When one looks at this interview there are several interesting points to keep in the back of one’s mind.

  1. This is a president of a country arguing with a host of an interview
  2. Generally when these high level interviews happen the person taking an interview tries to be very congenial even when questions aren’t answered the way they want and softly goes along.
  3. Psychological undercurrent here is Ukraine is arguing as a country versus European establishment, which is trying to enforce guidelines. It does not matter whom is right or wrong, what matters is acceptance or denial of perceptions and ramifications taken from this outlook.

A lot of accusatory language both in title and context, but there is a lot of in-congruence in the way congeniality is attempted on one side and not reciprocated on the other. Almost like the talking points were forced into the conversation but the choreography failed on the point of the host at least.I am far more interested in the host’s behavior rather than the President. It is almost symbolic in a way interview by ‘De Welt’ – ‘the world’ but in such an agitated state of nervousness (the host).

Dollar Yuan connection and speculating where it leads.

November 16, 2015

Dollar Yuan connection and speculating where it leads.

Over few days somewhat covered by the negative events in France certain economic realities are taking place behind the scenes.

Yuan will most likely be included in the IMF basket of reserve currencies represented within the SDR the global currency of the central bank exchange between them and international institutes.

Certain interesting thoughts come to mind. Gradual shifting of Yuan to exchangeability will allow some monetization by China of their financial system expanding monetary bases without directly influencing inflation to the population. It will probably aid in covering asset write offs by the system by helping plug financial black holes in the system by providing some liquidity. Furthermore what was a liability or exchange controls will gradually transition to assets. Ergo china will have a floating currency while capital controls will insure it sterilizing the inflation from having ability to print extra-territorially.

Dollar impact that I could fathom is thus. Any and all Yuan monetization is accompanied by dollars being in higher demand since the pair trading if it launches in earnest will carry demand for both currencies within the system. Ergo even if dollars are bought and yuan is sold the demand in future is neutral while the demand in the present is for both as a units of account on some clearing house computer. Thus both central banks will have a vent to expand monetary bases while limiting their entry through the asset system. Basically keeping asset inflation intact while preventing it seeping through toward the real economy, or so they think at least.

One has to wonder what happens when this excess monetary expansion actually makes it through the system. Well, there would perhaps be some preparation for wage-spiral inflation to both de-value the currencies globally and this would aid the dollar in pushing asset prices down vis a vis wages longer term while keeping nominal amounts intact for the financial system.

Imagine Yuan devaluation internally in China via money printing into the exchange rate system which is sterilized from the real economy. Pushing the exchange rate down while the U.S. would do the same on its’ end to keep the tandem in place, also printing into the financial system allowing the monetization of the exchange rate to be pro-rata shared in relation to some unknown benchmark to us. The problem with exporting real purchasing power into an abstract mechanic while letting their respective monetary systems to credit themselves off of it, is the instant devaluation of savings will create an acute shortage of capital. Credit access will not solve the delta between actual capital deploy ability and price containment. There is an undercurrent where clearance will consistently show real prices imploding while those without distress bifurcating into imaginary prices. Ergo velocity of money contracts further while clearance in the economy stratifies the current economic state in stasis thus essentially freezing income social classes while preventing accommodation across the spectrum of businesses and asset classes.

Sooner or later as financing off the carry trade, contract pledging against the currency contract flows, will create a very heavy negative push towards other currencies essentially compressing them beneath their real floors so harshly by the combined pairs that it will create extreme disturbances in global trade and asset prices. Imagine a company that is worth less than an exact same company in U.S. or China by a factor of several magnitudes. Yet, the problem as always in the unwind. When wage-inflation spiral finally permeates both countries it will essentially signal the end of the global exchange system. Hopefully I am wrong. Be well and prosper dear reader.

Syria and Ukraine, foreign policy hearings by U.S. Congress

November 10, 2015

Syria and Ukraine, foreign policy hearings by U.S. Congress

Two interesting perspectives by congressman Rohrabacher and another congressman.

until about 1h:55 min

until about 2h:23 min

It does seem we are there doing something we know not for, nor where it will end up.

Yet the goal is to do something for the perspective of showing something has been done.

The second congressman more or less has it right, we are essentially trying to pass the time along until the situation improves, resolves itself, or focus switches over to allay responsibility for whatever happens.

EU Seppuku as Schadenfreude

August 16, 2015

EU Seppuku as Schadenfreude

Long ago in the fairy tale land of Europe where economic windmills from Netherlands to the beaches of Greece there lived many upon many Don Quixotes, and their name was Eurocracy. Charging forth towards one political windmill unto the next they were set upon by their love for economic growth their ‘Dulcinea’ they began imagining schemes at stimulating it via various improvements. First they created a network of states that used their markets as leverage to pry open other markets and set their rules upon those markets so that only they could succeed there, for it was to their benefit and their benefit only was this network created. Then this network had to expand and expand to put growth on the pedestal of progress and fruition and the ultimate good for not the suffering of humanity but the exponential profit margins of benefactors of the Don Quixotes had to be pleased and respected. Alas, exponential growth may not last, and sooner or later a Europe whole and free, seems broken and indebted with no ‘Dulcinea’ (economic growth) to be found.

This is where the wonderful tools of sanctions under the guise of democracy and freedom for all, more for some than for others of course were brought to bare on other countries that had to just had to give market access and bend to the will of omniscient and wise Eurocrats, countries like Iran, Libya, Yugoslavia, Russia, Ukraine, and so on, for market access for enterprises is the greatest good ever far more important than peoples lives or well being. FREEDUMB!!! FREEDUMB!!! they cried as they bombed Lybia to take over the oil fields for western firms that promoted peace democracy and freedumb.

Alas, Satire or Irony does not do justice to the final act that is about to unfold.

The problem with marginal leverage based upon exponential growth via market penetration is at some point if you are pressed downward by impeding market access your financial system implodes since it was never ready for any pushback or strain.
EU is forging forward into the abyss as it gleefully persuades itself that what is being done is for the greater good. Yet, if one imagines a short interlude that clips trade flows for a period of time that kaleidoscopes Europe into complete and utter insolvency disrupting inter- and intra- national trade in some ways perhaps poetic justice may exist. Granted no solace will be had for millions upon millions of people guided by Don Quixotes, because sometimes the windmill does hit back especially if your charging it with a horse and it weighs a few tons.

Ukraine, Greece, and the Euro-Debt-Trade paradigm.

February 13, 2015

The most important aspect is the tendency at hand. What we have right now is essentially a coalescence of refinancing commitment necessary concentrated focal points. Notice Greece and Ukraine are being refinanced through the ECB and IMF and other venues at the same time as three political processes are ongoing.

My opinion estimates and ramifications.
Ukraine has roughly $150b in debt both corporate & sovereign.
Greece has roughly 350b in euro debt sovereign.
Euro-Zone money supply of the is around ~9000-10000 Billion this is both M1 and M2 (currency and deposits).

Political process A is the Ukraine peace process. Its’ necessity stems from the need of both Euro area banks to get refinanced for their pledged collateral from both Ukraine sovereign and corporate debts. It also increases likelihood of trade sanction being retracted if the peace holds in the proposition and promotion of goodwill creation. Ergo, the March 15th posturing by the countries wishing to return to normal trade ties with Russia will use the peace process as an argument to wind down sanctions and get to business as usual.

Political process B is the Greek debt renegotiation. This has to provide for flow relief for the Greek state which cannot bear the brunt of the outflows imposed by the IMF and the budget commitments/constraints while at the same time Euro banks cannot have the principal that does not exist be eliminated since it is pledged/re-pledged. There is also a deposit dimension that is ignored in the lending to Greek banks so that depositors could have funds via Euro mechanisms that could detonate if there is a disruption in how things get resolved. That is why it seems the Greeks wanted to have infinity bonds which lowered their cash flow burdens with the need to refinance being eliminated and the Europeans couldn’t agree to principal essentially haircut via the mark to market of those renegotiated bonds. The whole point is for Greeks this is a flow argument because they live in the present and for Europeans it is a past/future argument since they cannot have the NPV of the lent funds be marked to reality yet they are far more flexible on the flow of interest payments.

Political process C is the EU-US trade deal push that is being pushed via both the political implementation of the refinancing of Euro banks via IMF backing or freezing of that refinancing to cajole implementation. While using the backdrop of Ukraine and Greek determinism through trade flow disruption via Russian sanctions and Eurosystem dis-integration via a Grexit. This would detonate the money=debt backing of the Eurozone through evaporation of about ~500 billion Euro a negative event for the money supply at the same time removing swap lines and limiting trade flow clearance if progress isn’t being made. The contagion from this implosion is ignored since Euro banks (Austrian, French, Italian, and others) whom have exposure through both operations and capital market in Greece+Ukraine have been swapped out into the system but in my view would likely go insolvent on a push back and there simply is no way to create capital out of thin air to refinance Europe the way it has to be to clear the losses that exist and experience asset deflation in the aggregate that has to be achieved to clear the system for it to function.

If one is extremely cynical then you could argue that the whole point of Minsk was to allow the refinancing of Ukrainian debt by the IMF so that the European banks whom used it as collateral to borrow elsewhere to continue playing the financial game would be able to go on for a little while longer.

Page 52(on the paper below) shows exposures as a percent, one has to assume that these are not honest numbers and they changed since then. However, if one were to look up every bank that has over 1% of capital committed to “risky”(insolvent) nations one realizes that a) they raised capital b) in the context of European leverage being 30x or more to 1, a complete wipe out of 1% of capital or more is actually a 1/3rd of all the capital a bank has and likely complete insolvency/wipe out with inability to clear depositors or transactions. Ergo if one assumes that Austrian banks are exposed to 3-5% of their capital in Ukraine a wipe out of that 3% would invariably be all the equity capital those banks have. (Hypothetically but more than likely)

If suddenly 500b of 9140b* Euro goes poof and 9140b in Euro translates into roughly e15000 of GDP then one can consider that the ultimate impact through various multipliers, trade gravity, monetary transactions, etc., would be around ~1.64+ per 1 euro lost, ergo ~820 billion euro less in GDP recognition, however they could also print money and make up this gap and hence we have 1000 (trillion) euro QE which is actually a numerical measure which will simply put numbers into the computer to make up the wipe out seem fine and dandy. Granted none of this money will make it into the real world unless the banks that get to borrow against phantom obligations can get some sort of return somewhere from their machinations. If one throws into this the ~50 billion in Euro trade contraction due to Russia sanctions and the aggregate business impact that has through the Eurozone, the real impact of QE ONE Trillion is actually Nil.

(page 2 of the ECB below has total deposits of ~8789 (I exclude 4[215], 5[324] and 3.4[79] which sum to 618 billion euro) and get 8171+967 (currency in circulation) [I don’t think (4)insurance deposits or (5)government deposits should count along with (3.4)repos].
[page 52 … One has to be cognizant that some banks raised capital since 2010 but taking scope of risk in relation to capital is non-the-less gives a purview.]

“Free the Monster Inside”

October 31, 2014

“Free the Monster Inside”

I have been inspired by everything that has gone wrong in the world. Today on the eve before Halloween the day when people put on mask’s and pretend to frolic in the shadows of the night, only to turn backward into the malaise of their routines at the start of the next day. Imagine all the things you really want, what is stopping you other than yourself? Rules? Regulations? those words are written by old men for the sake of corporations that want a corner of the world onto themselves. THEY FEAR YOU, the dreamer, the doer, the person whom leaves, the person whom comes back, the person whom creates, the person whom upsets. Throw your mind like a spear and follow it, for the prey is on the other end. Weakness is a delusion it does not exist only attempts, further attempts, until you get where you want to be.

Push the road with your mind it will bend. Just take the first step and the barriers will crumble. Free the monster that you can be for all the enemies in your wake. Every social strand of structure is against you succeeding and making yourself happy, tread on all of them as they have done on your dreams. SHOW NO MERCY! Imagine a way and it will be there, just use your brain and make a path that does not exist to get where you want to get.

Sometimes you get that feeling that the world is at a focal point where just a little feather as it falls on the weight scales pushes the future one way or another. You are it, you are that force. CRUSH THE SCALES!

Connect with others that dream what you dream, create with others that want to create with you, bend the world by yourself or make a following, its’ all up to you. All you have to do is simply try, today, little by little, it does not have to be all at once, just one step at a time, step by step by step.

Porn, Meditation, and Motivation

May 29, 2014

Found these two interesting stories

Porn may be messing with your head & Market Playing and Meditation

On some level I can understand why. Basic urges level out the motivational factors and make us dumb and complacent. While practicing mind clearance creates a steady state from which decision making about future monetary bets and their outcomes leads to a place of not caring about outcomes more thus easier judgment about them.

A society of disposable wants and needs with the base core want of monetary enrichment at the forefront of its apex core value if you combine the focal points of the two. Seems an enlightening prospect really. Seeking that which is hard wired into humans and making it filtered with mnemonic suggestion of becoming increasingly dumb. Yet on the other hand pushing ever deeper the clearance of once mind to deeply seek 1s and 0s in the proverbial search for consumable treasures. Neither is really satisfying in the long run and both are seemingly churned in perpetual motion to set a society running after its’ tail over and over again without stopping to think over what the true ideals should be.

Oh Ice cream and consumable gluttony perhaps?

Too fat to fight.




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