Stocks rose on news of the chaos in France. The thinking seems to be that the Fed cannot possibly raise rates in such an uncertain environment. Or if they do it will be one and done. Corporate bonds dropped on the same news, showing that the bond market has a very different opinion. And now German and Italian bonds are trading at negative interest rates - people are now paying the German government to hold their money for two years. The only way to explain negative interest rates is to believe that deflation will continue and inflation is far, far away.
Japan has had two consecutive quarters of GDP contraction and is officially in a recession.
The Russians have announced they have found traces of foreign made explosive - about two pounds of TNT - on their downed airliner flying out of Egypt and vowed to run down and punish those responsible.
Anonymous, the amorphous group of hackers, has announced that they are joining the ranks of those fighting terrorists. They are publishing personal details on muslims with extremist views. They're also collecting lists of twitter accounts and web sites that promote extremist views. They have been reporting accounts to twitter who then throw them off twitter, and have been using distributed denial of service attacks on web sites.
France is bombing all sorts of buildings and installations in ISIL territory. The US has been sharing satellite photos and electronic intelligence with France, helping them identify targets. At home French police have conducted 128 overnight raids searching for more terrorists. At least four of the terrorists in the attacks were French residents.
Belgium has shut down the metro in Brussels. Belgian Prime Minister Charles Michel said on "This was due to a threat of an attack by individuals with explosives and weapons at several locations in the capital." It's believed that ISIL is stepping up their attacks to draw the west into a ground war in Syria. The Koran says this will result in a crushing defeat for ISIL, killing their armies down to the last 5,000 men. At this time Jesus will return and lead the last 5,000 muslims to a world wide victory over the "armies of Rome." Really, that's what this is about. I think these muslims really don't appreciate what special forces and aircraft carriers and nuclear submarines can do - things have changed in the last 1300 years. Over the centuries tens of millions have died at the hands of the armies of the god of the desert - Ra, El, Jehovah, Al-Lah. I find two aspects of this particularly difficult to understand: 1) Why does the God who created 200,000,000,000 galaxies each holding 200,000,000,000 stars need humans to massacre each other? and 2) In every major religion on earth at some early point a prophet taught "thou shalt not kill." Were I God, I would be up in heaven watching this and wondering, "Is it me? Have I been unclear?"
Nial Ferguson, Harvard historian, said of the Paris attacks: "Here is how Edward Gibbon described the Goths' sack of Rome in August 410AD: '... In the hour of savage licence, when every passion was inflamed, and every restraint was removed ... a cruel slaughter was made of the Romans; and ... the streets of the city were filled with dead bodies ... Whenever the Barbarians were provoked by opposition, they extended the promiscuous massacre to the feeble, the innocent, and the helpless...'. Now, does that not describe the scenes we witnessed in Paris on Friday night?" Ferguson says this is exactly how civilizations fall. "Europe has allowed its defenses to crumble. As its wealth has grown, so its military prowess has shrunk, along with its self-belief. It has grown decadent in its malls and stadiums. At the same time, it has opened its gates to outsiders who have coveted its wealth without renouncing their ancestral faith."
The baltic dry index - the cost off sending shipping containers across the ocean - continues to plummet. Almost all shippers are now operating at a loss. This is due to continued drops in the numbers of containers being shipped, and due to shippers taking delivery of more ships that were ordered last year when trade was at a all-time high.
The price of copper also continues to collapse, indicating that there is less and less construction going on in the world. This is mostly about China, which used more cement in 2011-2012-2013 than the US used in 1900-1999. But it seems the days of building empty cities are over.
The Financial Stability Board, an institution created by the Group of 20 nations, has issued a preliminary report. They intend to require large banks to raise more capital to hold against possible losses, with the objective of making sure that banks that are too big to fail will no longer require government bailouts. The total amount required is $1.2 trillion. The banks will be given a few years to raise this capital. About $120 billion of this is due to the largest 8 US banks; most of the rest is European banks.
Volkswagen, previously accused of cheating on six cylinder diesel cars manufactured from 2014 to 2016, is now accused of also cheating on four cylinder diesel Audis, Porsches and Volkswagens dating back to the 2009 model year. The cheating software is on Audi Q7 and Volkswagen Touareg SUVs from the 2009 through 2016 model years, as well as the Porsche Cayenne from 2013 to 2016. Also covered are Audi A6, A7, A8, and Q5s from the 2014 to 2016 model years, according to the EPA. Audi spokesman Brad Stertz said the software is legal in Europe. I'm not at all certain the European courts will agree with Mr.Stertz' interpretation. When you're designing a new engine you are trading off horsepower, heat, durability and emissions against each other. Any fix to these engines will mean existing owners will find their engines make less power, run hotter and wear out faster. We're going to be hearing about this for the next fifteen years.
On August 3rd, Obama said that "no challenge poses a greater threat to our future and future generations than a change in climate." A group of climate scientists gathered this week at the Texas Public Policy Energy and Climate Summit. Here's a sampling of what they had to say:
MIT Climate Scientist Dr. Richard Lindzen: "Demonization of CO2 is irrational at best and even modest warming is mostly beneficial. When someone says this is the warmest temperature on record. What are they talking about? It's just nonsense. This is a very tiny change."
Princeton Physicist Dr. Will Happer: "Policies to slow CO2 emissions are really based on nonsense. We are being led down a false path. To call carbon dioxide a pollutant is really Orwellian. You are calling something a pollutant that we all produce. Where does that lead us eventually? Coal, formed from ancient CO2, is a benefit to the world. Coal is CO2 from ancient atmospheres. We are simply returning CO2 to the atmosphere from which it came when you burn coal. And it's a good thing since it is at very low levels in the atmosphere. We are in a CO2 famine. It is very, very low. CO2 will be beneficial and crop yields will increase. More CO2 will be a very significant benefit to agriculture."
Greenpeace Co-Founder Dr. Patrick Moore: "We are dealing with pure political propaganda that has nothing to do with science." Dr. Miike Hulme, Professor of Environmental Sciences at the University of East Anglia and Director of the Tyndall Centre for Climate Change Research, wrote "Claims of a climate catastrophe are not the language of science. The discourse of catastrophe is a campaigning device. The language of catastrophe is not the language of science. To state that climate change will be 'catastrophic' hides a cascade of value-laden assumptions which do not emerge from empirical or theoretical science. Is any amount of climate change catastrophic? Catastrophic for whom, for where, and by when? What index is being used to measure the catastrophe?"We are living right now in a six million year long ice age. It's hard to see that we are warming the earth, and it's hard to see how warming the earth 10° back to a more normal level would be catastrophic.
We're in the middle of a record setting El Nino. This is a condition where warm water forms off the coast of Peru and works its way westward towards New Guinea. Warm waters in the pacific means a lot more rain for the west coast and drought conditions for Australia and SE Asia. The pacific northwest up to Alaska and New England will have an unusually warm winter; the gulf coast will have a cool winter. You're almost certainly going to be hearing of Malibu cliff houses sliding into the ocean. Record El Ninos are followed by a few years of La Nina - a cooling trend in the same part of the Pacific. So after this winter, California is very likely to resume a few years of severe drought. Drought will also likely hit the gulf coast, causing problems in Florida and Georgia. The east coast will likely have record hurricanes and storms next year.
Bleeding gums. Joint pain. Swelling and bruising. These are the signs of scurvy, the pirate's disease, caused by a lack of vitamin C. In the 1800s the British navy handed out limes, hence "limeys." But this is all ancient history, right? These days you eat a three or four ketchup packets a day at McDonalds and that's enough vitimin C to keep you from getting sick. A recent CDC survey found that about 8% of our population has scurvy; about 15% of low income people. Cheeseburgers and fries and a coke, three times day for a couple years, next thing you know you have scurvy.
Free picture of the week.