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Globalization for Everyone
Hernando de Soto
LIMA – Nowadays, globalization’s opponents seem increasingly to be drowning out its defenders. If they get their way, the post-World War II international order – which aimed, often successfully, to advance peace and prosperity through exchange and connection – could well collapse. Can globalization be saved?
The results of state elections in Berlin may be another indicator of an economic downturn.
By George Friedman
My apologies for constantly returning to Germany but for the moment it is the pivot of the world. Germany is the fourth largest economy in the world, the largest economy in Europe, the lender of last resort and the foundation of European stability. If Germany weakens or destabilizes, Europe destabilizes, and it is not too extreme to say that if Europe destabilizes, the world can as well. I am confident in saying I am not making too much of a small thing. In Sunday’s state election in Berlin, the Social Democratic Party (SPD) got 21.6 percent of the vote. Chancellor Angela Merkel’s Christian Democratic Union (CDU) got 17.6 percent. A party called Die Linke (or The Left) got 15.6 percent and the Greens got 15.2 percent, while the liberal Free Democrats garnered 6.7 percent. The anti-immigration party Alternative for Germany (AfD) won 14.2 percent.
The difference between AfD and the party that got the highest percentage of the vote was just 7.4 percent. Three other parties were jammed between these two. In other words, the electorate in the Berlin region is completely fragmented. Put another way, the mainstream SPD and CDU together got a little over a third of the vote. The rest went to anti-establishment parties, with the two left-wing parties, Die Linke and the Greens, getting over 30 percent combined and the anti-immigration party getting just under 15 percent.
Berlin does not represent all of Germany, but it is the capital. Therefore, the fact that the mainstream parties were together repudiated by the majority of voters is significant. In Berlin at least, the German political system has shattered. Even a coalition of the SPD and CDU wouldn’t be enough to rule. Adding the Greens (a sort of establishment party) wouldn’t give them a majority either.
How to Profit When Citigroup's $56 Trillion "Casino" Catches Fire
By Michael E. Lewitt, Global Credit Strategist, Money Morning
Editor's Note: Michael's presentation tonight at 8 p.m. is going to show you the huge profits to be had in "punishing" Wall Street for its greed and stupidity. But before tonight's main event, he wanted to show you exactly how lucrative this can be. His readers made 277% and 148% on the same day swatting Deutsche Bank on the nose, and he's looking at a similar setup on this American bank.
They say even a busted clock is right twice a day: The International Monetary Fund recently called Deutsche Bank AG the "world's riskiest financial institution."
Deutsche Bank (NYSE: DB) stock is barely off 30-year lows, and it spent a great deal of this late summer frantically unloading some of its multibillion-dollar derivatives book. It's too late for Deutsche Bank, but that hasn't stopped it from trying.
Another troubled Eurozone bank, Credit Suisse Group AG (NYSE ADR: CS), has been doing the same with its derivatives.
But if you thought these bad banks would have any trouble unloading their toxic "weapons of financial mass destruction," you'd be wrong.
In a breathtakingly stupid move, one American bank has been on a derivatives shopping spree, eagerly buying up these insanely risky instruments just as fast as Deutsche Bank and Credit Suisse can sell them.
Like a kind of Mayflower, full to bursting with toxic stupidity and risk, these ticking time bombs are heading across the Atlantic.
And that means there's another huge opportunity waiting for you…
What Citigroup Failed to Learn in 2008
Citigroup Inc. (NYSE: C) already nearly destroyed itself with derivatives during the 2008 crisis, requiring the biggest taxpayer bailout in history in order to stay afloat.
Strangely, it didn't learn its lesson the first time its stock fell below $1.
As rival banks see the writing on the wall and scramble to get rid of their derivatives, Citi is now cheerfully snapping up billions of dollars' worth.
Several weeks ago, Credit Suisse prudently sold $380 billion of derivatives to Citi, thereby reducing its own leverage exposure by $5 billion. Last year, Deutsche Bank palmed off $250 billion of credit default swaps on (guess who?) Citi, and is in talks to get rid of even more.
The result is that Citi now holds the most derivatives of any of its U.S. rivals. That's a staggering total exposure of nearly $56 trillion, according to the OCC's latest report, shown here:
If only this were some sort of massive, momentary lapse of institutional sanity. Bizarrely, this is a strategy that Citi has been pursuing for some time.
Three years ago, the bank separated its derivatives and cash traders and created dedicated derivatives teams – including a "risk optimization" team led by Vikram Prasad, who explains, "You can't have every trader obsessing over every capital measure. By giving that responsibility to a dedicated team, we're using our resources in a more efficient way."
While acknowledging derivatives are so risky as to require a large stable of dedicated handlers, Citi continues amassing and championing them. "We consider single-name CDSs to be an integral part of our overall credit business," says Brian Archer, Citi's New York head of global credit trading. "A large number of our biggest clients still want to trade the product and use it to move risk. We have the appropriate resources in place to service that demand."
In other words, Citi is playing with dynamite – and it's proud of it.
Never, Ever Play with Derivatives Dynamite
In fact, our current $650 trillion derivatives market is a nightmare scenario waiting to happen.
First problem: the size. It's 36 times the size of the U.S. GDP and over eight times larger than the world GDP – the entire global output of the entire world in a year.
While credit default swaps (the type of derivative that played a huge role in the financial crisis) shrank significantly in size since the financial crisis, they remain large enough to constitute a potential time bomb inside the financial system that could blow up any time.
Second problem: the interconnectedness. Every derivative contract involves two parties that agree to make certain payments to each other. But if one party is unable or unwilling to live up to its agreement and make those payments, the other party is left holding the bag and nursing a big loss.
In a crisis, this can leave a volume of broken contracts that will overwhelm these institutions and render them instantly insolvent.
That's what happened in 2008.
American International Group Inc. (NYSE: AIG) almost blew up because it wrote too many derivatives contracts on collateralized bond obligations that held billions of dollars of subprime mortgages. AIG couldn't meet its obligations, leaving thousands of counterparties around the world at risk of loss.
This is why the U.S. government had to step in and bail out AIG (and Citigroup, which seems to have forgotten this part of its history) – to save those other counterparties from massive losses that would have destroyed the financial system.
Today's level of derivatives in an increasingly unstable and volatile financial system isn't sustainable.
Derivatives are opaque, difficult‐to‐price instruments from which Wall Street earns large profits.
Wall Street is not a public utility – it is a profit-seeking engine whose primary purpose is to generate money for itself.
The more complex and opaque the instrument, the easier it is for Wall Street to fool investors (even supposedly "smart money" investors like hedge funds and large institutions) and mark up these instruments to earn outsized profits from selling and trading them.
Wall Street's limitless greed and disregard for risk has created a complex monster that it simply doesn't understand. It can't control this monster for much longer.
Citigroup certainly won't be able to.
How to Profit When Citigroup Goes Bust
The global financial system remains grotesquely overleveraged and unprepared for another crisis. Banks like Deutsche Bank and Citigroup are at the epicenter of this weakness.
Members who are following along have already made 277% or more on my Deutsche Bank trade – and you still have a chance to profit. I think the embattled, derivative-ridden monster is headed down to $5, and you can get my latest put recommendations here.
When the next market dislocation arrives, as it inevitably will, these derivatives will again earn their reputation as "weapons of mass financial destruction." If counterparties are unwilling or unable to perform, all bets will be off.
The definition of insanity is doing the same thing over and over and expecting a different result. The first time Citigroup tangled with the derivatives monster during the 2008 crisis, its stock plunged to a low of $0.97.
In the grip of some bottomless stupidity I can't fathom, it's expecting a different result this time around.
We should not.
So, in order to profit when (not if) this stock collapses, I recommend some long-dated puts.
In Men, Depression is Different
Symptoms—and help—are unlike what women experience
By Elizabeth Bernstein
I am worried about a friend. He’s stopped responding reliably to texts and calls from his friends and seems irritable and edgy when we do see him. He complains of insomnia, no energy and lack of motivation. Ask him how he’s doing and he says, “I’m not myself.” “I’m drowning.”
He’s depressed. I don’t know how to help him.
Statistics show that men become depressed much less often than women do. In 2014, 4.8% of men aged 18 or older in the U.S. had at least one major depressive episode in the past year, compared with 8.2% of women in the same age group, according to the National Survey on Drug Use and Health conducted by the Substance Abuse and Mental Health Services Administration.
But experts worry that these figures don’t tell the whole story. Men are much less likely than women to report feeling depressed or to seek treatment for depression.
Psychiatrists and health care professionals define major depressive disorder as five or more of the following symptoms present for two weeks: depressed mood most of the day, irritability, decreased interest or pleasure in most activities, significant change in weight or appetite, change in sleep, change in psychomotor activity such as either agitation or sluggishness, fatigue or loss of energy, feelings of guilt or worthlessness, changes in concentration and recurrent thoughts of death.
Women often internalize depression—focusing on the emotional symptoms, such as worthlessness or self-blame, experts say. Men externalize it, concentrating on the physical ones.
Men typically don’t get weepy or say they feel sad. They feel numb and complain of insomnia, stress or loss of energy. Often, they become irritable and angry.
Some men aren’t in touch with their feelings. But the larger problem is that men have been conditioned not to talk about them. “There is that sense that they should be in control of their emotions and that being depressed can be viewed as a sign of weakness,” says Jeffrey Borenstein, a psychiatrist and president of the Brain and Behavior Research Foundation in New York. Men are expected to handle problems on their own, he says.
This sense of weakness can make depression worse for men, therapists say. “For women, depression is a signal for getting help, that something needs to be addressed in a fundamental way,” says Nando Pelusi, a clinical psychologist in New York. “For men, it’s a signal that they are a failure and are submitting to defeat.”
That sense of defeat is why depressed men typically withdraw and isolate, says Donald Malone, a psychiatrist and chairman of psychiatry and psychology at the Cleveland Clinic.
And this can wreak havoc on a man’s relationships, as loved ones, especially spouses, can feel hurt and rejected. Research shows that marital problems can cause depression in both men and women. But one classic study, published in 1997 in the journal Psychological Science, showed that while for women the marital problems often come first, for men depression comes first and then causes the marital problems. “The male response to depression is to push away, which can lead a partner to feel helpless and alone,” says Wendy Troxel, a psychologist and senior behavioral and social scientist at the Rand Corp., in Pittsburgh.
How can you help a man who is struggling from depression?
Normalize the situation.
Insist that this isn't his fault and he isn't alone. “Look up men and depression on the internet—you will be amazed at what you see,” says Michael Addis, professor of psychology at Clark University, in Worcester, Mass., and director of the Research Group on Men’s Well-being. Many accomplished men have suffered from depression, including Abraham Lincoln, Winston Churchill, Buzz Aldrin and Bruce Springsteen.
If you’ve suffered from depression open up about your struggle. Explain that depression is treatable and it is important to get help, just as you would with any other illness.
Don’t be critical. He’s already beating himself up emotionally. And don’t express worry or concern. This suggests you don’t think he can handle the situation on his own.
“Be sensitive to the way his depression feels profoundly humiliating to him,” says Joshua Coleman, a psychologist and senior fellow at the Council on Contemporary Families, a nonprofit organization based at the University of Texas at Austin that distributes research about American families.
Therapists say the word “we” can be very powerful: “We are in this together.” “We will find a treatment that works.”
Ditch the “D” word.
Research shows that men can be defensive about the word depression, and that those who are the most traditionally masculine resist it the most. In a 2013 study in the journal Psychology of Men & Masculinity, men who said they weren't depressed admitted to having some symptoms, such as anxiety.
Did he mention he had insomnia? No energy? Encourage him to seek help for the symptom he is describing. Seeing a primary-care physician is a good start.
Ask about suicide.
Men are about four times as likely as women to die from a suicide attempt, even though women attempt suicide more often. They use more lethal means.
Don’t be shy about asking a man if he has thoughts of hurting himself. Experts also recommend asking if he has a gun and offering to hang on to it until he feels better. “It’s like holding on to a friend’s car keys when he’s drunk,” says Rand’s Dr. Troxel.
Suggest a therapy that focuses on behavior changes.
Many men don’t want to talk. And they believe a therapist is going to tell them what they already believe: “You are a loser.”
There are several types of psychotherapy that have been shown to successfully treat depression and that focus on changing one’s behavior. These include Cognitive Behavioral Therapy, which helps a person change his thoughts, and Behavioral Activation, which helps him become more engaged in his day-to-day life. These may be more comfortable to many men.
Encourage him to do what he does well.
Activities a man excels at can produce a sense of mastery and satisfaction, says Dr. Troxel. If they are physical activities, they will produce endorphins. If they are social activities, they will give him a boost of the feel-good hormone, oxytocin.
Men also typically gain a sense of accomplishment from getting tasks done. But depression can make even a simple chore feel overwhelming. Dr. Troxel recommends breaking projects into smaller pieces to make them more achievable and to foster an immediate sense of accomplishment
Express your limits.
It is important to realize that you don’t need to be on the receiving side of a depressed man’s anger or blame—or be the only one showing up for the relationship. If you are reaching your limit, say that clearly. “I care about you. I am there for you. But I need you to get help.”
If your husband is depressed and you feel helpless, consider getting therapy for yourself. Therapy can also help you understand what is happening, and how you can better help.
Don’t give up.
Be persistent, even if he is pushing you away. “People do get better with treatment,” says Dr. Borenstein.
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
No soy alguien que sabe, sino alguien que busca.
Only Gold is money. Everything else is debt.
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Quien no lo ha dado todo no ha dado nada.
History repeats itself, first as tragedy, second as farce.
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
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