US Stock market, plus Boeing

I thought it would be a War in the mid-east that would get the dominoes falling. Turned out a real black swan. However much many think that the US stock market was on solid foundation, false premise. The underlying instabilities that caused 2008 crash never went away.

Injection of trillions, low Fed Interest rates almost free (now zero rates, i.e free)  helped the stock market soar and insiders to take their money of the table. Middle class Tax payers, Pension funds, the small retail stock buyers are left holding the bag.

I expected a probable drop to 20K and a somewhat probable to 15K. The collapse and drop even surprises me, and other skeptics. Now even 15K seems highly probable. Thats why I say read alternative media, like ZeroHedge, RT and Unz (aka Fake news) to see the other side of the spin.

Boeing:
When Boeing management said it was the fault of foreign pilots (in other words non white) spelt their own doom.  I said Boeing should drop below 100, I did not expect this fast.  Hedge fund operated Boeing, cutting corners to maximize profits. Stock buybacks, were the norm to push up stock price. Investment in safety measures, research and development, was not part of management decisions.
Maybe Trump will inject money into Boeing to get the stock price up. The insiders will sell. Retail idiots who believe Boeing is a great American Company will buy, not knowing Hedge Funds, Bezos and the like are not real Americans, i.e. those who care about the deplorables and others.
Now Trump, like the Boeing guys wants to deflect his responsibility, saying racist Chinese Virus. I think going to end much like the Boeing management.

Unhappily for the US, the alternatives in leadership are equally horrible. Biden another Trump probably worse, in the stages of Dementia and will be a puppet. If Sanders is able to get the nomination (anyone opposing Trump will win), he will be blocked by his own party the Democrats.

Update 1:
Matt Stoller, The Nation. From 2011 (!), still germane:
There’s a good amount of grumbling about the state of American infrastructure—collapsing bridges, high-speed rail, etc. But American infrastructure is not just about public goods, it’s about how the corporations that enforce, inform and organize economic activity are themselves organized. Are they doing productive research? Are they spreading knowledge and know-how to people who will use it responsibly? Are they creating prosperity or extracting wealth using raw power? And most importantly, are they contributing to the robustness of our society, such that we can survive and thrive in the normal course of emergencies?

The answer to all of these questions right now is “no.” And while this may not be hitting the elite segments of the economy right now, there will be no escape from a flu pandemic or significant food shortage. The re-engineering of our global supply chain needs to happen—and it will happen, either through good leadership or through collapse.
Note, again, the date. Stoller: “This stuff was obvious, except to economists.”

https://www.thenation.com/article/archive/how-america-could-collapse/

Dow Jones (DJI)

Trump, Iran, Gold and Financial Crash

A couple of FB post in one place predicting if there is a war with Iran

a) Gold will sky rocket USD 1,700/oz and above is a high probability (USD 1,400 on June 20)
b) Will Trigger a Financial Crash bigger than the 2008 because

• Possibility of  Oil pushing USD 100- USD 150
  That will trigger trillions in derivatives and the dominoes fall

Gold Price as of June 25 2019 (usd/oz price is on right axis)

c) Saudi Arabia will fall apart, like Libya. Recall what happened to Kuwait.  Luckily Bush senior saved absorption of Kuwait into Iraq.


Probability  of war is high. On the negative side Trump would prefer war after 2020 Election.  However, he is out weighed by War Hawks, Bolton, Pompeo, Kushner, Israel and Saudi Arabia.

----------------------------------------------------------------------------------
Gold Prediction (June 20)
A little late, but low downside risk and high upside to buying gold.
Upside of Gold at USD1,700/oz and above is reasonable upside in my opinion.

I* have been saying since 2009 there will be another Financial crash and to buy gold. 10 years later it has not happened. The Central banks and the US Fed have managed to keep on kicking the can down the road.
It is a good possibility the Central Banks have reached the end of the road. The potential of war with Iran and US-China trade conflict maybe the big nail on the coffin for an financial crash.

Iran has said if sanctions wont allow Iran to export oil, no one will get oil from the mid-east. i.e. they will shut down the Straits of Hormuz. I dont think Iran is bluffing.
For war to be avoided, Trump will have to provide concessions to Iran. Concessions like permitting Iran to export oil to China and India . Maybe it can be done in a face saving way for the US, without appearing to look weak.

* Not really, I. More like Satyajit Das and Raghuram Rajan (both who predicted the 2008 crash early as 2005). For me that why I read ZeroHedge.
.

-------------------------------------------------------

An analysis on Iran and US sanctions (21st June)
Trump may well want some diplomatic exchange with Iran. But Iran will not talk to him as long as the sanctions against it are kept in place. It will continue its maximum pressure campaign by creating new incidents that will again increase the price of oil. The easiest way out for Trump is to abolish sanctions against Iran. He at least should issue waivers for China and others to allow them to again buy Iranian oil.

Unless he does so Iran will hit again and again against those who press for war against it. Yesterday it was a U.S. drone and a Saudi desalination plant that were the targets. The next incident could be in some oil facility in the United Arab Emirates or a symbolic strike against Israel.

The ball is still in Trump's court. He has to act further to avoid a larger war.

https://www.moonofalabama.org/2019/06/white-house-pushes-trump-pulled-back-story-he-likely-never-approved-to-strike-iran.html?

--------------------------------------------------------------
Sanctions need to End for probability of War to become Less (June 24)

Trump: “I have some hawks. John Bolton is absolutely a hawk. If it was up to him he'd take on the whole world at one time.“
Trump: I was against going into Iraq... I was against going into the Middle East. Chuck we've spent 7 trillion dollars in the Middle East right now

So will Trump avoid a war with weapons with Iran. Unhappily Trump does not realize crippling starvation sanctions are war by another means. Unlike Venezuela, Iran has a Trump card, shut down the Straits of Hormuz.
Just the direct statement from Iran saying it will bomb/attack any tankers passing thru the Straits will shut it down. It gets shut down because Insurance companies will refuse to insure vessels going thru the straits.

Repeat, Trump needs to end sanctions against Iran. At the least allow the sale of oil to some countries like China. Otherwise war with Iran is still in play

https://www.zerohedge.com/news/2019-06-23/trump-unleashes-uber-hawk-bolton-he-would-take-whole-world-one-time

Iceland does not want foreign investors

A law passed on May 22 by Iceland's parliament is offering the foreign holders of about $2.3 billion worth of krona-denominated bonds a choice of either selling out in June at a below-market exchange rate, or have the money they receive upon maturity be impounded indefinitely in low interest bank accounts. In other words, Iceland is trying to kick out foreign investors.

For now, investors aren't interested in the deal and wish to stay invested in Iceland, even as officials are clearly trying to push foreign investors out. What does that say about the world when some investors believe there is lower counterparty risk dealing with a government (Iceland) hostile to foreign investors than their own governments (US, UK) at home?

Iceland has rebounded since the financial crisis. The Icelandic Krona has stabilized against the Euro, the rate of change in inflation has slowed, and the country has recorded year-over-year growth in GDP each year since 2011.

http://www.zerohedge.com/news/2016-05-28/iceland-has-offered-foreign-bondholders-choice-sell-now-or-have-cash-impounded-indef
http://www.wsj.com/articles/iceland-puts-freeze-on-foreign-investors-1464366399

Sustainability of Increasingly Complex Societies

A must read article along the lines of Joseph Tainter's Collapse of Complex Societies.  Examines the

viability and sustainability of increasing complex societies.  Is “doing more with less”, i.e. is ever increasing productivity sustainable.

One should also think of increasingly complex Finance and Financial Instruments, and increased instability of finance and economies (kind of touched here) when reading the article.  Its all connected.

Excerpts from the Archdruid Report

recent chatter about “cloud computing.” What is this thing we’re calling “the cloud?” Descend from the airy realms of cyber-abstractions into the grubby underworld of hardware, and it’s an archipelago of huge server farms, each of which uses as much electricity as a small city, each of which has a ravenous hunger for spare parts, skilled labor, and many other inputs, and each of which must be connected to all the others by a physical network of linkages that have their own inescapable resource demands. As with Fuller’s satellite analogy, the ephemeralization of one part of the whole system is accomplished at the cost of massive capital outlays and drastic increases in complexity elsewhere in the system.

The basis of that theory is the uncontroversial fact that human societies routinely build more infrastructure than they can afford to maintain. During periods of prosperity, societies invest available resources in major projects—temples, fortifications, canal or road systems, space programs, or whatever else happens to appeal to the collective imagination of the age. As infrastructure increases in scale and complexity, the costs of maintenance rise to equal and exceed the available economic surplus; the period of prosperity ends in political and economic failure, and infrastructure falls into ruin as its maintenance costs are no longer paid.

The pulse of anabolic expansion and catabolic collapse thus defines, for example, the history of imperial China. The extraordinary stability of China’s traditional system of village agriculture and local-scale manufacturing put a floor under the process, so that each collapse bottomed out at roughly the same level as the last, and after a century or two another anabolic pulse would get under way. In some places along the Great Wall, it’s possible to see the high-water marks of each anabolic phase practically side by side, as each successful dynasty’s repairs and improvements were added onto the original fabric. rably more troublesome if the resource base lacks the permanence of traditional Chinese rice fields and workshops. A society that bases its economy on nonrenewable resources, in particular, has set itself up for a far more devastating collapse.

Buckminister Fuller had a well-earned reputation in the engineering field of his time as “failure-prone,” and a consistent habit of pursuing efficiency at the expense of resilience was arguably the most important reason why. The fiasco surrounding Fuller’s 1933 Dymaxion car is a case in point. One of the car’s many novel features was a center of mass that was extremely high compared to other cars, which combined with an innovative suspension system to give the car an extremely smooth ride. Unfortunately this same feature turned into a lethal liability when a Dymaxion prototype was sideswiped by another vehicle.

The unavoidable tradeoff between efficiency and resilience can be understood easily enough by considering an ordinary bridge.

A society dependent on vulnerable satellite networks in place of the robust reliability of oceanic cables, cloud computing in place of the dispersed security of programs and data spread across millions of separate hard drives, just-in-time ordering in place of warehouses ready to fill in any disruptions in the supply chain, and so on, is indeed more ephemeral—that is to say, considerably more fragile than it would otherwise be.

Another Economic Crash: Reserve Bank of India Governor Raghuram Rajan

Reserve Bank of India Governor Raghuram Rajan says another economic crash is probably in the

books.  Dont dismiss him as just the RB India Governor.  Raghuram Rajan is also a Professor of Finance at University of Chicago and one time chief Economist at IMF.

I personally keep track of Raghuram Rajan and Satyajit Das, both great names in the Finance world but also critical of current Financial Instruments.   Raghuram Rajan had paper out in 2005 "Has Financial Development Made the World Riskier? which I came across in a Salon article in 2006 (see below). 

Based on Raghuram Rajan's article and what I knew working in (Fixed Income) Bonds and Derivatives (till 2009) had a  discussion with a Grad school Colleague also in Derivatives (he worked for a Hedge fund) in 2006. I kept on betting against the trend and made some money with PUT options in late 2007 collapse. I used only money I could afford to loose, so made a little money, 1:10 returns or more.)

Date: Fri, Apr 28, 2006 at 5:29 PM
Subject: Re: Credit Derivatives: Wall Street bets on a housing bubble

http://www.salon.com/tech/htww/2006/04/18/credit_swaps/index.html

Wall Street bets on a housing bubble

I think could be optimistic if things are given time to play out. Maybe the time is to equilibrium is a little faster now, than in the past simply because of the "global village" thing.

However, the pessimist in me wonders if two  or three of the pivots of instability give way at the same time.

e.g. In no particular order (Italics: Current additions to explain to non-technical)

1. ARM's ((Adustable Rate Mortgages) start to collapse (default)

The Lehman defaults kicked in defaults, then mortgages (MBS) and Credit Derivatives defaulted. If the US govt had not stepped in and backstopped the Banks, complete collapse. Anyway that was the end of Investments Bank. The thinking at that time a couple would fail; instead all failed.

2. Iran requires payment in Euros
3. China starts pull out of the Treasury Market
4. Some nut creates a virus that just freezes the net for a few weeks (that would give a run on the banks.)

To me whats scary is that the whole world is so tied together that

instead of it becoming stabler, its created more points of instability not

just for the US but for the world.

I guess the converse also holds in that as everyone is tied together

that there is a vested interest to keep things as stable as possible.

Anyway, the underlying issues of the 2007-2008 Financial Collapse have not gone away. The huge debt loads, by Govts (e.g US: $12.6 Trillion 104% of GDP see post on GDP calculations) and personal debt (US $99,000 103% of Disposable Income) have not decreased.  This can only happen by write off (debt forgiveness) and restarting the clock.  It cannot be decreased by earnings  taxes or austerity, the debts are too large. (see US cant tax its way out of deficits).

Note: Actual liabilities of the US Govt, when Social Security, Medicare, and federal employees' future retirement benefits are included is $86.8 trillion, or 550% of GDP.

The debt in turn is the basis of many Financial Instrument, from simple Bonds to complex Mortgage Backed Securities and CDO's.   These Instruments in turn are the basis of the Asset side Investments of many balance sheets. So when defaults occur it cascades into loss of value in instruments which in turn trigger balance sheet funding requirements.

Triggers can also be political/social turmoil.  Think Ukraine. Ebola or Iraq.

So something has to give, its not a question of IF but WHEN.   If you knew when, you would be a $ millionaire with a small investment against the trend. 

Capital Gains Tax on UK Properties

Cash strapped countries will resort to desperate measures. The UK is proposing capital gains tax on properties sold by non residents. When will the US follow suit.

Sky News television reported a month ago that the government is considering extending capital-gains tax to foreign investors. Treasury minister Sajid Javid indicated last month an announcement was likely when Chancellor of the Exchequer George Osborne makes his Autumn Statement to Parliament tomorrow.

Foreigners and out-of-town vistors, none of whom vote locally are a soft target.

From Comments

This happens in the US as well. In my state they re-wrote the real estate tax laws to put unoccupied (e.g. second homes) and rented homes in a different tax class than owner-occupied homes. Once this was done, smaller vacation communities (which have a high percentage of second homes) taxed the shit out of that classification while cutting the owner-occupied class a break; they were able to do this because the second home owners couldn't vote in local elections that passed the tax increases. Never underestimate how quickly your government and neighbors will fuck you over if there's something in it for them.

After all, what better way to "honeypot" and trap foreign capital than by making inbound cash transfers easy, and then once the real estate "reserve currency" has been acquired, to change taxes and force foreigners to pay up for the privilege of having been allowed to park their illegal capital there in the first place. 

In effect not much different from "Nationalization" in 70's of foreign owned estates and companies in Sri Lanka.

via
http://www.zerohedge.com/news/2013-12-04/its-payback-time-foreign-uk-homebuyers-be-subject-capital-gains-tax

US Debt of 16.8 Trillion: How it Breaks down

US Debt of 16.8 Trillion: How it Breaks down.  Note the Federal Reserve cannot be strictly considered completely Federal Government.


via:
http://www.npr.org/blogs/money/2013/10/10/230944425/everyone-the-u-s-government-owes-money-to-in-one-graph

US Govt Shutdown: Possible Consequences

 1 Countdown to US default looms
  A halt of US government operations would drag the world’s biggest economy closer to bankruptcy, something unprecedented in US history. If no budget deal is done, the US would bump up against their “debt ceiling”  and run out of money by October 17. By then, the US government would have less than $30 billion cash on hand, Treasury Secretary Jacob Lew has calculated.
2 Hundreds of thousands of federal employees on furlough
  A one-time layoff of 800,000 people working for the US government would erode the earlier projected economic growth of 2.5 percent for the fourth quarter of 2013 by about 0.32 percentage points, according to a forecast by Mark Zandi, chief economist and co-founder of Moody's Analytics. That projection assumes a two-week shutdown. If it drags into a whole month, the loss of GDP would rise to 1.4 percentage points.
3 Troops’ paychecks stopped
  About 1.4 million military active-duty personnel would keep on working, but with their paychecks delayed. Approval for troops’ paychecks is dependent on Obama’s proposed 2014 federal budget being passed by Congress.
4 Women and children’s nutrition program threatened
 Pregnant women and new moms who are poor and facing “nutrition risk” won’t be able to buy healthy food, as a looming shutdown would put bracers on the $6 billion Special Supplemental Nutrition Program for Women Infants and Children (WIC).
5 $85 billion in cuts to federal programs
When a shutdown was last threatened in March 2013, it would have resulted in $85 billion in automatic cuts in spending on federal programs – many aimed at alleviating social hardship. The cuts, known as sequestration, would affect grants to local organizations and funds that keep those programs running.
6 Housing loans halted
US federal programs that provide for about 30 percent of all new loans in the housing market – a backbone of the country’s economy – will be shut down. Government funding of new businesses will also be halted, as well as workplace health and safety inspections.
7 Trade talks scuppered?
US plans to have a Pacific trade deal, the Trans Pacific Partnership, signed with the US’s Asian partners could stall, as Obama may decide not to travel to this weekend’s Bali, Indonesia meeting of the Asia-Pacific Economic Cooperation nations. While he could still go if no deal is done by then, it could be a gift for his Republican opponents if Obama was seen to be jetting off to a tropical paradise at a time when federal employees were sent home without pay.

8 Visa delays likely
Thousands of Americans may not be able to get passports for foreign travel, and tourists travelling to the US will likely face delays in visa processing. During the last government shutdown in 1996-97, some 20,000-30,000 applications remained unprocessed daily.
9 Space program on hold
  Space agency NASA will be hit the most, as the agency will need to furlough about 97 percent of its employees, though it will continue to keep workers at Mission Control in Houston and elsewhere to support the International Space Station, where the two NASA astronauts currently on board, Michael Hopkins and Karen Nyberg, may not know whether they have jobs to come back to.
10 National parks, museums and zoos would close to the public
State-funded museums, art galleries and zoos across the country would keep their doors closed Tuesday, leaving thousands of employees furloughed and visitors unable to see attractions. US national parks, from Yosemite to the Shenandoahs, as well as Washington’s National Mall, Lincoln Memorial and Constitution Gardens, would also be closed.

via:
http://www.zerohedge.com/news/2013-09-30/shut-happens

US: Depositors in Foreign US Bank branches will have No Deposit Insurance

Starting today, following a 5-0 vote by the FDIC (Federal Deposit Insurance Corporation) , depositors in foreign US bank branches will officially no longer have recourse to a $250,000 in deposit insurance. The notional amount of deposits at risk: $1 trillion. This is not a new development: the FDIC rule to curb insurance on this category of deposits was proposed earlier this year, and today was the formalization.

I think Citibank is the only major US bank with branches in Sri Lanka.

The FDIC's action was prompted by the move last year by U.K. regulators to propose changes in the way deposits held at overseas branches should be treated. FDIC officials said.

If the UK proposals are implemented then HSBC deposits in Sri Lanka will no longer be insured.


More at
http://www.zerohedge.com/news/2013-09-10/1-trillion-us-bank-deposits-held-abroad-will-no-longer-be-insured

Poland Confiscates Half Of Private Pension Funds To "Cut" Sovereign Debt Load

First Cyprus Bailed in by freezing deposits over EUR 100K to reduce its debt load to comply with ECB mandates. Now Poland confiscates private pensions funds.  Indian are busy trying to smuggle diamonds into Singapore. What next

To summarize the Polish Pensions fund confiscation

1. Poland Government has too much debt to issue more debt
2. Government nationalizes private pension funds making their debt holdings an "asset" and commingles with other public assets
3. New confiscated assets net out sovereign debt liability, lowering the debt/GDP ratio
4. Debt/GDP drops below threshold, government can issue more sovereign debt

To quote

In the aftermath of Cyprus, we now know what the two most recent European blueprints for preserving the myth of solvency are: bail-ins, which confiscate deposits, and pension fund "overhauls", which confiscate, well, pension funds.

More here
http://www.zerohedge.com/news/2013-09-06/poland-confiscates-half-private-pension-funds-cut-sovereign-debt-load

Economist Jayati Ghosh: India's Woes Foretell 'Chaos and Violence'

Excerpts from an article by Jayati Ghosh on Der Spiegel

China is fundamentally strong; it has a huge trade surplus. India, however, suffers from a huge current account deficit, which we are trying to partly fill with hot money, or speculative investment, from abroad. China first and foremost has to control its illegal shadow banks, but that is not at all comparable to the mess that we are now facing in India.

Our government reacts with panic measures. For example, it desperately attempted to attract more capital into the country by easing rules for external commercial borrowing. This, however, only worsens the structural causes of the rupee crisis. Our much vaunted economic boom was essentially a debt-driven consumption spree, financed by short term capital inflows. Those who profited were mostly construction companies and the real estate sector. India's boom was also peculiar in that it did not generate any new jobs, but instead deepened the gap between rich and poor.

I am fundamentally in favor of a bigger role for the state in order to direct investments and control banks. However in China, as in the rest of Asia, a big real estate bubble was created. Instead, China should have strengthened domestic consumption in order to free itself from the dependence on exports.

 If I look at the 21st century I see a huge imbalance. The most important economic currents flow from South to North: the trade in ever-cheaper products which the emerging markets produce; the capital investments -- because these countries invest their surpluses in US bonds; the cheap labor which they export, and with which they help solve the problems of those aging societies. But why does the North still dominate? Because it still invests a lot of money into research and development, and it controls intellectual property.

We can't manage the simplest things, because our starting point was completely different. When China began its reform process at the end of the 1970s, almost everybody there already had enough to eat. There were roads in almost every village, and there was medical care. In China, society was by and large equal. In contrast, a third of Indians still don't have electricity. We fight against the legacy of a caste system which condones inequality and discrimination. India's elites put up with conditions which are extremely damaging

SPIEGEL: Your government promises to open up the country further for big foreign corporations like Wal-Mart and Ikea. Is this really the way to create enough new jobs?
Ghosh: These measures only destroy jobs. Everybody knows that retail multinationals employ much fewer people per product and per turnover than the small shops that dominate in India. Instead, we have to invest in the basics, in infrastructure: A road to every village. Water, electricity and housing for everyone. Access to bank credit for everyone -- not just for rich entrepreneurs. We have to concentrate on things that create jobs. Then India's economy will grow on its own.

SPIEGEL: Ahead of the parliamentary election next year, nobody believes the government has the courage to reform. What happens if your country falls even further behind in the process of catching up?
Ghosh: Then we will face political and social chaos on a mass scale, and an increase in violence against women, as we are already seeing.

http://www.spiegel.de/international/world/indian-economist-jayati-ghosh-warns-of-chaos-and-violence-a-919048.html 

Water Wars: Dam Blue Nile in Ethiopia

The Blue Nile which comes from the Ethiopian highlands supplies 50% of the water to the Nile in Egypt.  Construction of the Renaissance Dam in Ethiopia started in 2011, filling of the dam is expected to start in 2015 and completed by 2017.

Now Younis Makhyoun the head of Islamist Al-Nour party in Egypt, suggests the dam should be sabotaged.

“Egypt can coordinate with rebels in Ethiopia and use them as a bargaining chip with the Ethiopian government” Makhyoun said. “If this fails, then there is no choice but to use intelligence to destroy the dam.”

In 2011 the Economist commented

How will Ethiopia pay? Chinese banks are apparently underwriting the cost of turbines and other electrical equipment.

Neither the World Bank nor private investors are willing to put up the cash, since Ethiopia has failed to create partnerships with power companies in neighbouring countries to which it could sell electricity. The Nile's geology may be favourable for dam building, but the flow of money is not.

Background on Ethiopia

Ethiopian History starts around 700 BC and became Christian around 300 A.D.  It has been the only country (Abyssinia at that time) in  Africa that was not colonized by Europeans.  In 1936 Mussolini occupied part of Ethiopia.  The Italians formed the colony of Eritrea and approx 40K Italian colonists were settled in the colony.  Italys occupation ended after World War II.  The Eritrean war of Independence lasted 30 years (1961 – 1991). One of the British proposals was that Eritrea be divided along religious lines with the Christians to Ethiopia and the Muslims to Sudan. 

The Ethiopian Highlands called the Roof of Africa forms the largest continuous area where  little of its surface falls below 1500 m (4,921 ft), while the summits reach heights of up to 4550 m (14,928 ft). Because of the height these mountains catch the precipitation of the monsoon winds of the Indian Ocean, resulting in a rainy season that lasts from June until mid-September. These heavy rains cause the Nile to flood in the summer, a phenomenon that puzzled the ancient Greeks, as the summer is the driest season in the Mediterranean climate that they knew.

US & UK Travel Warning to Sweden: 5th Day of Rioting:

Who would have thought this would happen in Sweden.  Generous cradle to grave benefits, you name it.   A country with 15% foreign born population. Norway has a little less 14% and having similar immigrant problems

Now schools, police stations and cars are being set on fire, but looting has not been reported. So far the army has not been deployed.

There is a lot of chatter on the Finance forums I read, that expect similar riots to occur in Europe during the summer. Specially, Greece, Spain, Italy where increasing  economic crisis and youth unemployment is over 25% is a tinderbox.  Wonder when they start to throw out the "rights" rule book.  Already this year Sweden implemented  a de facto  racial profiling with project REVA.  What's next.

 Another aspect I find puzzling is that there is very little reporting of the riots in the US and UK.  As of Friday, The NY Times World Section does not have a word on the riots.

Update: Apparently this is not the first time this has happened.

In 2010, up to 100 youths threw bricks, set fires and attacked the local police station in the immigrant-heavy suburb of Rinkeby for two nights. \

And in 2008, hundreds of youths rioted against police in the southern Swedish town of Malmoe, sparked by the closure of an Islamic cultural centre in the suburb of Rosengaard that housed a mosque.

The news from the horses mouth
US & UK Travel Warning to Sweden:  http://www.thelocal.se/48120/20130524/ 
5th Day of Rioting: http://www.thelocal.se/48100/20130524/

Four days of rioting in Stockholm, Sweden

Apparently sparked by the killing by police a 69 year old armed man.  Sunday night's disturbances according Rami Al-Khamisi a youth organizer said in a statement started as a "reaction to police brutality against citizens, our neighbors"

From one of the comments learned of project REVA where Stockholm police stop people who dont look ethnically Swede (i.e. don't have blond hair) in public transport, and take them for interrogation if they don't have their papers/ID.

Anyway Excerpts from  Financial Times on Riots

Rioting in Stockholm spread to as many as a dozen suburbs in a third consecutive night of unrest that has reopened the debate about how well integrated immigrants are in Sweden.

Cars were set on fire all over the Swedish capital on Tuesday night and early on Wednesday, while in several suburbs police and other emergency services were pelted with stones, Swedish television reported.

“It is very similar to what we have seen in London or Paris but not yet on that scale. But it is a sign of a similar problem; it is a sign of failing integration,” said Per Adman, associate professor at Uppsala University, before the latest unrest.

Experts say that while the Nordic country successfully integrated its immigrants in the 1960s and 1970s it has struggled to do so in the past decade, with many blaming a lack of jobs for low-skilled workers. Youth unemployment was 25.1 per cent in March, above the EU average, even as the overall rate was 8.4 per cent and below the average.

From http://www.ft.com/intl/cms/s/0/9310c7d0-c222-11e2-ab66-00144feab7de.html 
More here: http://www.huffingtonpost.com/2013/05/21/sweden-riots-4-arrested-stockholm-suburb_n_3312512.html

Unlikely Allies in Eurozone Trade Wars: Germany and China

One would think that Germany would be the first to support  tough tariffs/duty on Chinese solar panels being imported into the Eurozone. Specially given that Bosch Solar Energy AG and the Siemens Solar unit are dire trouble being unable to compete with cheap Chinese solar panels.

So here is another example of no friends only interests

Companies in the US and Europe complained about these cheap imports, and anti-dumping proceedings were initiated. In Europe, it started last summer. And last week, reports surfaced that the European Commission was ready to act. On June 5th, if no solution materialized, the Commission would slap Chinese-made solar panels, cells, and wafers with punitive import duties of on average 47%.

Last week, the Commission fired another shot, launching an investigation into anti-competitive behavior by Chinese telecom equipment makers Huawei and ZTE, China’s high-tech crown jewels. But the 47% punitive duties on solar panels were the harshest measure yet in the trade war, hitting €21 billion worth of Chinese imports.

On Sunday, it was German Economy Minister Philipp Rösler, who warned of a trade war with China and lambasted the European Commission for its decision to start an anti-dumping procedure against Chinese telecom equipment makers. A “grave mistake,” he called it.

That’s the European dilemma. With many countries mired in recession, and some sinking into depression-like conditions, the Commission wants to protect certain industries. While it can’t protect Spanish companies from German competition, it can protect them from Chinese competition. Given how much German solar-panel makers have suffered under Chinese pressure, and how many billions in subsidies and investments have gone up in smoke, the Commission might have counted on German support.

But for Germany Inc., China is one of the two big economic engines that are still pulling. Exports to the Eurozone, particularly to top trade partner France, have stalled, and the industry is looking to China for growth. Chinese money is also flowing into Germany as Chinese companies are on a shopping spree, paying top euros for 98 firms in 2012, including Putzmeister, a world brand for concrete pumps [article on the aftermath]. Germany Inc. sees in China an escape route from the economic mayhem of the Eurozone; it sees a booming market with over twice the population of the EU. For Germany Inc., China is the future – and Europe a drag. One more treacherous rift across Europe.

From:  http://www.zerohedge.com/contributed/2013-05-21/germany-fires-live-ammo-sino-european-trade-war-brussels

Russia: Four warships in Mediterranean (Syria)

 From ZeroHedge

A few days when reporting that the Russian Pacific fleet had crossed the Suez canal for the first time in decades in order to form a Mediterranean task force parked in Cyprus for obvious symbolic reasons (in close proximity to Syria and the Israel-parked Kearsarge), some observed that while the submarine support was adequate, the actual warship fleet designated to support any potential escalation in Syria would be largely insufficient. Perhaps the Russian Navy heard these complaints, and several hours ago RIA reported that two extra warships from the Russian Black Sea fleet had joined the Mediterranean task force, citing Capt. First Rank Vyacheslav Trukhachyov, has said. None of these recent deployment should come as a surprise: in March Russian Defense Minister Sergei Shoigu said a permanent naval task force in the Mediterranean was needed to defend Russia’s interests in the region. Read Syria, Cyrpus (where the task force will be on anchor indefinitely), and, of course, any and all western offensive involving Iran. And slowly but surely said task force is nearing completion.

 More at http://www.zerohedge.com/news/2013-05-20/russia-adds-two-more-warships-mediterranean-task-force-near-syria

Very Understandable Infographic on Cyprus

A very easy to Understand Infographic on Cyprus.  For the complete poster go to Saxomarkets or click on poster snippet below.  via ZeroHedge