October 16, 2014 1:22 pm

 
The markets are right to be anxious
 
The US no longer controls its own destiny nor, indeed, the destiny of others, writes Stephen King
 
 
The mood in Washington during the weekend IMF meetings was bad enough but the mood in markets now appears a lot worse. Last week the big issue was the eurozone. This week the big issue appears to be the US. Rapidly declining US Treasury yields and plunging equity markets are broadly consistent with a US economy that, one way or another, might be running out of steam.
 
Still, it is difficult to see why a clutch of moderately weak US economic data – of which retail sales is the most obvious culprit – would be enough on its own to trigger a major attack of the jitters.
 
There are other things happening too. Ebola has raised the anxiety levels. So too have widening Greek bond spreads. There may also, belatedly, be a heightened sense that the US economy could be undermined by bad developments elsewhere in the world.
 
Most economists tend to think that where the US leads, the rest of the world follows. They regard the US as the locomotive of a train with other economies the carriages that follow. On that basis, a recovery that begins in the US will eventually pull the rest of the world along. That, broadly, was the consensus at the beginning of the year. The US was evidently doing better. It was only a matter of time before economic conditions in the rest of the world would also improve.
 
Admittedly, some worried that a US recovery would be followed by higher interest rates. But as Stanley Fischer, vice-chairman of the Federal Reserve, noted over the weekend, “tightening should only occur against the backdrop of a strengthening US economy … [which] should directly benefit our foreign trading partners by raising the demand for their exports, and perhaps also indirectly, by boosting confidence globally”.
 
Sometimes, though, another analogy makes more sense. In this story, the US is the first to climb a cliff. Other countries are tethered to the US by ropes. The overall pace of ascent depends on the burden of debt each country has to carry. One false move by the US will wreck the entire enterprise. Yet the US will only get to the top if the others also make steady progress. At the moment, they are more in danger of losing their footing, thereby dragging down the US.

There are good reasons for thinking the cliff analogy is, today, a better bet. Deleveraging is a huge burden and there is no obvious end in sight given still remarkably high debt levels. The US economy’s share of the global pie is shrinking and therefore it no longer exerts the same gravitational pull on the rest of the world. And, increasingly, economic and financial developments elsewhere are reshaping US economic performance in ways that domestic policy makers cannot easily offset.


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What a Correction Feels Like

By Jared Dillian

October 16, 2014


Back in the summer of 2007, when I was working for Lehman Brothers, I had a vacation to the Bahamas planned. This was unusual for me. Up until that point, in six years of working for Lehman, I had taken about five vacation days—total. But my wife and I were going to a semi-primitive resort on Cat Island, the most desolate island in the Bahamas. Interesting place for a vacation. Suffice to say that it’s plenty hot in the Bahamas in August.

Back in the summer of 2007, when I was working for Lehman Brothers, I had a vacation to the Bahamas planned. This was unusual for me. Up until that point, in six years of working for Lehman, I had taken about five vacation days—total. But my wife and I were going to a semi-primitive resort on Cat Island, the most desolate island in the Bahamas. Interesting place for a vacation. Suffice to say that it’s plenty hot in the Bahamas in August.

The market had been acting funny for a while, and I had a hunch that there was going to be trouble while I was gone, so I bought the 30 strike calls in the CBOE Market Volatility Index (VIX). I was betting that volatility was going to go up a lot in a short period of time. In fact, these options—which I spent a little over $100,000 on—would be worthless unless there was outright panic. I gave instructions to my colleagues to sell the call options if the VIX went over 35. (Note: my memory on the details of the trade, like the strike of the options and the level of the VIX, is a little hazy. The specifics might have been different, but you get the general idea.)

So there I was, sunning myself at this primitive resort on Cat Island and the world was melting down, and I was completely oblivious to what was going on back on Wall Street. Coincidentally, the local Bahamas newspaper had a picture of black swans on the cover one day. I staged a photo of me in a hammock reading the newspaper with the black swans on it. I still have that photo.

I got back to civilization and checked the markets. I saw the chart of the VIX. I could hardly contain myself. If my colleagues had executed the trades properly, I would have had a profit of over $800,000. But when I got back to work and opened my spreadsheet, I found that I’d made less than $100,000. What I had failed to consider was that if the world actually was blowing up, the guys would have been too busy to execute my trade.

So there is this whole idea of state dependence that we have to consider when we’re talking about the market. Like, you might have a plan to buy stocks when the index gets below a certain level, but when the market gets to that point, you: a) may not have the capital; and b) might be panicking into your shorts. It’s nice to have a plan, but, paraphrasing Mike Tyson, everyone has a plan until they get punched in the face.

I remember reading Russell Napier’s book about bear markets, called Anatomy of the Bear. It talked about all the big bear markets in the US, including the granddaddy of them all, the stock market crash of 1929 and the Great Depression. One of the things that I learned from this book was that if you can time the bottom exactly right, you can make a hell of a lot of money in very short order. For example, if you had bought the lows in 1932, you could have doubled your money in a matter of months.

I wanted to do that. I prayed for a bear market, so I would get my chance.

Little did I know that I would get my chance just two years later—and blow it.

When the market is down 60%, it’s scary as hell to buy stocks. Hindsight being 20/20, you can say, “What, did you think it was going to zero?” Actually, yes—in March of 2009, people thought it was going to zero.

But for those people who: a) had capital; and b) weren’t terrified, it was a once-in-a-lifetime opportunity.
 
 
Thousand Days with No Correction

So let’s talk about a). Does everybody have capital? Remember, the hard part of this is not picking bottoms. Many people can do this quite capably. Panic/liquidation is very easy to spot. But few people have the ability to take advantage of it, because they’re fully invested.

As for b), you tend not to be terrified if you have capital.

Everyone knows by now that the stock market is correcting. The price action is pretty terrible. Will it get worse? I think so. We’re seeing excesses (corporate credit, growth stocks, IPOs) that we haven’t seen in many, many years. It’s been over 1,000 days since we’ve had a correction of any magnitude. With the market down about 5%, nobody is particularly worried, because every other time the market was down 5%, it ended up going higher.

Back to state dependence. What is it going to feel like if the market goes down further? How will people behave if the S&P 500 gets to, say, 1,700?

I can tell you what it will be like if the S&P gets to 1,700. It’s going to be like it was in August of 2007 when my coworkers forgot to sell my VIX calls because they were buried under an avalanche of panicked sell orders from institutional money managers. Pre-algorithmic trading, the trading floor used to get pretty noisy. I used to be able to tell you what the market was doing just from listening to the floor. At SPX 1,700, trading floors will be very noisy.

It’s been so long since we’ve had a correction, I’m guessing that most people have forgotten what a correction feels like. When you go that long in between corrections, people are sitting on a mountain of capital gains. And unless the capital gains really start to disappear, there is little pressure to sell. But if you’re the owner of, say, airline stocks, and you’ve watched them evaporate to the tune of 30%, that tends to focus the mind a little bit.

As with any steep correction, there will be fantastic opportunities, but they will only be available to those who have capital. Remember, bear markets don’t just destroy the bulls’ capital, they destroy the bears’ capital, too.

Bear markets destroy everyone’s capital.
 
Jared Dillian
Jared Dillian
Editor, The 10th Man
Mauldin Economics

A Century of Mainstream Media Lies

As technology has advanced, so have weapons of mass deception


Newspapers were the first vehicle that mainstream media (MSM) used to manipulate Americans into war. The Spanish-American War (1898) was fought over Cuba, which had been a colony of Spain since 1511. By the 19th century, Cuba had become the world’s wealthiest colony and largest sugar producer, and its assets were coveted by the Illuminist cabal, which also wanted Spain neutered as a world power. National City Bank, then America’s preeminent bank, controlled the McKinley White House, loaned the government $200 million to fight the war, and took control of Cuba’s sugar industry afterwards (see Ferdinand Lundberg’s classic 1937 book, America’s Sixty Families).

To get young men to fight and die in Cuba for the banksters, it was necessary to persuade Americans – for the first time – that the U.S. military’s duty was not only self-defense, but “righting wrongs” overseas. It was before and during this war that the media honed a skill that would prove perennially useful: manufacturing fake atrocity stories.

The “Yellow Press,” as it was then appropriately called, was spearheaded by William Randolph Hearst’s New York Journal and Joseph Pulitzer’s New York World. Together they fabricated outlandish atrocity tales about Cuba, such as Spaniards roasting Catholic priests. On October 6, 1896, Hearst’s Journal carried this headline: “CUBANS FED TO SHARKS. Cries Heard at Night – They are Taken Outside the Harbor, and the Silent Ferryman Comes Back Alone.” Pulitzer’s World raved: “RAIDED A HOSPITAL– More than Forty Sick and Wounded Cubans Butchered.” But no hospital even existed in the region the World described.

Hearst’s reporters rarely ventured outside Havana’s bars. Some never even traveled beyond Florida, where they forwarded tales spun by Cuban émigrés. And some stories Hearst invented himself in New York.

Hearst

Hearst (above) discovered that atrocities against women struck a special chord with readers. In December 1896 his Journal blared: “BUTCHERED 300 CUBAN WOMEN – Defenseless Prisoners Shot Down by Spanish Soldiers.”

Newspapers could not reproduce photographs then; they published drawings. In a primitive precursor to Photoshopping, Hearst “authenticated” stories with artists’ fabrications. Having money to burn, he hired celebrated painter Frederic Remington. After Remington arrived in Havana in 1897, a famous exchange occurred. Reportedly, he cabled Hearst: “Everything is quiet. There is no trouble. There will be no war. I wish to return.” Hearst replied: “Please remain. You furnish the pictures and I’ll furnish the war.” Although Hearst denied this exchange took place, the words embodied the reality.

Perhaps Remington’s most infamous illustration: a naked girl surrounded by three Spanish ruffians, under Hearst’s Journal headline: “REFINED YOUNG WOMEN STRIPPED AND SEARCHED BY BRUTAL SPANIARDS WHILE UNDER OUR FLAG.” In reality, a Cuban woman, who had aided revolutionaries, had been searched on a ship by a Spanish matron, in privacy. Remington had not witnessed the event.

Spanish search woman propaganda

Depictions such as these built up the anti-Spain fervor which exploded along with the Maine in February 1898; America went to war.

The Illuminati follow the principle “stick with a winner.” What worked to drive Americans into the Spanish-American War would work to embroil them in World War I. And so we went from the Maine to the Lusitania, and from Spaniards roasting Cubans to Germans cutting hands off Belgian children, and other contrived atrocities.

Poster propaganda reached its apex in World War I.

Bayoneting Belgian children Belgian captivity Liberty bonds Belgium Liberty bonds crucified soldier

What Americans didn’t know: the first $400 million from the “Liberty Bonds” they purchased went directly into J. P Morgan’s pockets, to satisfy war debts owed him by Great Britain. (Lundberg, America’s Sixty Families, p. 141)

Art was also used to depict the enemy as subhuman (animals are easier to kill).

Spanish American

C’mon, boys, look at that Spaniard trample Old Glory! You aren’t going to let him get away with that, are you?

Enlistment poster

Boys, see that damsel in distress? Are you going to let the kraut get away with that?

Moving pictures had arrived by World War I, creating a new venue for propaganda, such as The Cry of Peace (1915), which depicted invading Huns molesting New York City’s maidens:

Battle Cry of Peace

C’mon, boys, are you going to let them get away with that?

Between the world wars, radio emerged as a new medium which, behind the bait of entertainment, could pump live propaganda directly into homes.

It is possible that Orson Welles’ The War of the Worlds – perhaps the most famous radio broadcast of all time – was intended to gauge public response to fake news. In an eery foreshadowing of today’s faux news and crisis actors, Welles simulated a newscast that “interrupted” a musical program to announce an invasion by Martians. Massive, horrific deaths from the aliens’ weapons were vividly described. As the “news story” progressively unfolded, “newsmen,” “witnesses,” and government and military “officials” all gave accounts as if the events were real. The broadcast led to widespread panic.

War of the Worlds headline


Although the program began with a brief explanation that it was fictional, a second disclaimer was not aired until 40 minutes later. The wily Welles knew that many people flipped their radios from station to station (just as they do now with TV). Having missed the first disclaimer, many would assume the news was real.

The program aired just one month after the famous “Munich Agreement” of 1938; the pressure for war had accelerated in Illuminist circles, and Americans were about to be inundated with renewed “German invasion” hysteria.

If that connection seems a stretch, the original novel The War of the Worlds had been written by arch-Fabian socialist H. G. Wells, who in 1914 published The War that Will End War, which became World War I’s propaganda slogan. And the radio script was written by Howard Koch, who later wrote the screenplay for the most flagrantly pro-Soviet film ever made, Mission to Moscow, which depicted the USSR as a bastion of freedom, and even justified Stalin’s show trials and invasion of Finland. Koch also wrote the script for Sergeant York, the story of a World War I soldier who had been reluctant to enlist but ended up a hero; “coincidentally,” that film was released six weeks before Pearl Harbor. Koch eventually served a stint on the Hollywood blacklist.

World War II used every propaganda venue: newspapers, radio, movies.

Newsprint had come far since the Spanish-American War. Photographs could now be printed, and the public too trustingly assumed that these, unlike Hearst’s drawings and World War I posters, were fake-proof (“seeing is believing”). The “Shanghai baby” went viral in 1937, reportedly seen by 136 million people, and had profound impact on American sentiments favoring China and against Japan.

Shanghai baby

The Japanese, however, charged that the photo was staged, and a number of American journalists, such as Arthur Rothstein, eventually concurred. The photographer, H. S. “Newsreel” Hong, was employed by the Hearst Corporation (“You furnish the pictures and I’ll furnish the war”).

Shanghai baby 2

Radio fakery continued also. The war’s most famous broadcast was Winston Churchill’s “We Shall Fight Them on the Beaches” speech. However, this stirring oration, like many others credited to Churchill, was actually an impersonation by BBC actor Norman Shelley.

The ultimate opinion mover was, of course, movies.  Our Enemy: The Japanese, narrated by Joseph Grew (CFR), described the Japanese as obsessed with world conquest (while the footage showed Japanese harmlessly eating with chopsticks and boarding subways).

Hollywood’s vulgar racist stereotypes of the “enemy,” now generally acknowledged, need not be recounted here.

The disastrous Vietnam War, which should not – repeat, not – be confused with other wars, commenced just as TV ownership surpassed 90 percent of American homes. Known as the “first television war,” it was the only war in which the MSM turned its propaganda tools against the U.S. military. The coverage was instrumental in generating the chaotic divisiveness that launched the downward transformation of American culture and values.

Today’s media is more consolidated than ever. Six giant corporations own 90 percent of MSM, a point underscored by this footage of newscasters from various stations reading identical lines.

Politicians are no less centrally controlled. Watch the prime ministers of Australia and Canada giving identical speeches on Iraq:

The Illuminati know a prewritten script is more reliable than unrehearsed remarks. That’s why President Obama always reads from a teleprompter:

The President is similar to a movie actor, reading scripted lines as though “spontaneous.” But just like Obama’s teleprompter gaffs, the news media encounters its own scripting slipups. Many believe this happened on 9/11, when a BBC commentator reported the collapse of Building No. 7 twenty minutes before it happened:

Of course, the collapse of this 47-story steel frame structure, in 6.6 seconds, even though not hit by a plane, remains extremely controversial.

A script calls for actors. “Witnesses” can be quite effective, as when false testimony about Iraqi soldiers throwing Kuwaiti babies out of incubators spurred American support for the 1991 Gulf War. It was eventually proven that the “anonymous” Congressional witness was Nayirah al-Sabah, the daughter of Kuwait’s ambassador to the U.S., and had been coached on her tearful testimony by the global public relations firm Hill & Knowlton:

The Kuwaiti incubator hoax demonstrated that, once again, the Illuminati were “sticking with a winner.” The “Belgian children’s hands cut off” and the “Shanghai baby” had proven that baby atrocity stories are a tried-and-true, proven winner in the propaganda marketplace.
When the Powers that Be geared up for war on Syria’s Assad, the BBC and CNN used the same witness over and over: British-accented “Syria Danny,” who traveled around reusing the same props and fake sound effects of “shellings.” This video exposes Danny:

I am not suggesting that real atrocities do not occur. THEY DO, AND ON A MASSIVE SCALE. But the genuine atrocities are usually censored. If you want to see how a real bombing victim reacts, watch the Iraqi woman starting at 22:05 of this video.

Syria Danny’s fake pre-recorded “explosions” were reminiscent of CNN’s Charles Jaco’s broadcasts during the 1991 Gulf War, which this footage, including embarrassing outtakes, has called into question:

Lest anyone thinks CNN wouldn’t deliberately fool viewers, watch this clip exposing two newscasters pretending to converse via satellite when they’re actually in the same parking lot:

“Green screens” give reporters another means of pretending to be elsewhere, as is suspected of this recent CNN “on the water” reporting on the Ukraine crisis:

Collusion between media and government should surprise no one. Operation Mockingbird, the CIA’s program of media recruitment and control begun in the 1950s, was widely admitted even within MSM. It has recently been reported that CIA payments to journalists continue. Watch correspondent Ken Herman question President George Bush, Jr. on government-produced footage presented as television “news”:

In George Orwell’s 1984, televisions continually broadcast fake news in accordance with government wishes. The “death” of Bin Laden on May 2, 2011, marked a major step in this direction. Just 17 days earlier, a Gallup Poll had shown President Obama’s approval ratings at an all-time low. Allegedly Bin Laden headed the world’s largest terror network. If so, capturing him alive should have been top priority, since he would have been a goldmine of information.

Instead Bin Laden was reportedly shot dead, and the government immediately proclaimed it had dumped his body into the ocean – guaranteeing the body could never be viewed and its identity verified. Although “leaked” photos of Bin Laden’s bullet-ridden body quickly surfaced in the press, analysis demonstrated these were old pictures that had been Photoshopped.

War room Bin Laden death poster

The use of actors to fake reality is an emerging art. Politicians utilize them often, as shown in this compilation of people “fainting” during Obama’s (and Hillary’s) speeches, with Obama compassionately ensuring they are taken care of:

If those examples aren’t enough, this clip includes more with some repeats.

Just as Hollywood casting departments screen-test actors for specific roles, so can the government, whose budget dwarfs Hollywood’s. Most disturbing are allegations that actors are employed as witnesses and participants in false-flag events, a process satirized in the 1997 movie Wag the Dog:

CNN certainly appears to have interviewed the same woman as a witness to both the Boston Marathon bombing and the Watertown shootout with the suspects four days later:

Even more engaging is Betsy McGee’s video on Steve Silva as “super witness” to both the Boston Marathon bombing and 9/11:

Betsy has also produced a long but insightful video on Boston Marathon bombing notable Carlos Arredondo.

Of course, now we have war with ISIS. And public sentiment has been swayed to support it through the usual means: highly publicized atrocities, in this case viral beheading videos, whose authenticity many have challenged.

It was only last year that a previous attempt was made to bomb Syria. That was based on a different atrocity claim – that Assad was using chemical weapons on his own people. But many believed it was the Western-backed insurgents themselves who wielded the weapons as a “false flag,” a view thought credible by Ron Paul, Pat Buchanan, and many other responsible observers. The fake testimony of “Syria Danny” had proven unconvincing. Americans overwhelmingly opposed the air strikes Obama sought on Syria.

So it was back to the drawing board. Now we have ISIS beheadings, and Obama has air strikes on Syria. After the first video proved effective on public opinion, more kept appearing. “Stick with a winner”?

Question: If ISIS wants to consolidate its control in that sector of the Middle East, why would it upload viral videos showing beheadings of American and British victims, knowing this could only result in bringing the full might of the Anglo-American war machine against itself? Somewhere I hear William Randolph Hearst saying: “You furnish the pictures and I’ll furnish the war.”

The public needs to decide which media to listen to:


• corporate media, hired to produce propaganda that will advance geopolitical agendas; or

• unpaid alternative media, whose goal is to discover the truth.

My thanks to the many bloggers and investigators whose diligent research provided content for this article.