Stocks did the roller coaster thing - up in anticipation of Super Mario cutting rates and increasing both the amount and duration of european QE; then down when he cut rates and increased the duration, but did not increase the amount. Everyone is very unhappy with their new drug supplier.
France continues to accelerate into recession. Their unemployment just hit 10.6%, the highest it's been in 20 years. The service sector PMI has dropped to the lowest number in Europe, and the retail PMI is deep in recession territory. Consumers are broke, unemployed, and scared to appear in public - a toxic combination for a weak economy. You may expect Super Mario to continue his QE more and longer. The big question is, will it work? Some economists are beginning to say that negative interest rates will have the opposite affect on consumers, that in fact they will see this as a clear sign of deflation and find a way to squirrel away their money. Perhaps. Economically, all I'm certain of is that we're in uncharted waters and much of what I learned in college somehow no longer applies.
France just had elections and their right wing anti-immigration party was th big winner. Things re changing in europe quickly. The reality of multiculturalism doesn't match up well with the dream.
S&P cut Brazil to junk as their deficit soars and their economy seems to be collapsing. Unemployment is up to 8% while inflation is now over 10%. Industrial production is down over 10%. There's an ongoing investigation of corruption in Petrobras, the state run oil company, that just recently got the head of the senate arrested. Alberto Ramos, chief Latin America economist at Goldman Sachs, said, "When you look at the numbers just on the domestic demand side, excluding net exports, the way this is going, I think pretty soon we have to start labeling this a depression rather than just a recession."
Mexico is cutting infrastructure spending, putting pressure on several of their largest construction companies. Mexico’s biggest construction company, ICA, just suspended payment on their bonds, indicating they're a couple weeks away from default. ICA has the worst performing bonds among all emerging market economies. The Bank of Mexico just released an alert on excessive dollar denominated debt. Several Mexican companies appear to be close on ICA's heels.
PennyMac. AmeriHome Mortgage. Stearns Lending. Impac Mortgage. Four large mortgage companies in S.Cal. All run by former Countrywide executives, the bankrupt mortgage company that was right in the exact middle of the 2008 subprime mortgage crisis. From 2009 through 2011, nonbank lenders originated about 10% of all mortgages. But then Wall Street firms stormed into the housing market. In 2012, nonbank lenders originated over 20% of all mortgages, in 2013 nearly 30%, in 2014 about 42%. That share surpasses the peak of the 2009 financial crisis. California home prices are at record highs right now. The FHA is guaranteeing mortgages with 3.5% down payment and credit scores as low as 580. What happens if California home prices start to drop? We all already know the answer to that, don't we? Countrywide made about $10 billion in profits before going bust and leaving us taxpayers holding the bag. Now it seems the executives are doing it again, this time with Wall Street funding. It's not hard to guess who will be left holding the bag next time. The only question is, how long until the inevitable crash?
The Chicago PMI came in at 48.7, indicating that businesses are not spending money. This was easy to anticipate based on the high inventory levels. If this number continues for another quarter it would indicate a recession.
Researchers at the Center for Cyber and Homeland Security at George Washington University investigated the presence of American ISIS supporters on social media and found that "ISIS-related mobilization in the United States has been unprecedented." US authorities are reportedly aware of 250 Americans who have attempted to travel to Islamic State territory — some successfully, others not — in Syria and Iraq. And there are 900 active investigations against ISIS supporters in all 50 states, according to the report. Most ISIS sympathizers the center found are young males: the average age is 26, and 86% are male. More than half attempted to travel abroad, and 27% were involved in plots to carry out attacks in the US. Many were American-born and had no prior history of radical views. About 40% of the people studied were converts to Islam, the Religion of Peace. "Ranging from grown men who had flirted with jihadist militancy for over a decade to teenagers who have only recently converted to Islam, from the son of a Boston area police officer to a single mother of two young children, these individuals differ widely in race, age, social class, education, and family background," the report said. "Individuals with such diverse backgrounds are unlikely to be motivated by the same factors."
A couple muslims gunned down 35 or so in San Bernardino, killing 14. They used a couple of AR-15s with large capacity clips, highly illegal here in the People's Republic. Obama predictably immediately called for further gun restrictions. Already California has mandatory background checks on all firearm purchases, a 10 day waiting period, no open carry, very rare concealed carry, no magazines with more than 10 bullets, no assault weapons. In short, California is the liberal dream state. Exactly what law might Obama wish to add which would have prevented this massacre by muslims using highly illegal weapons?
Why does Iran hate us? Here's a timeline of modern Iran:
In a stunning development it has been found that increased carbon dioxide in our atmosphere has lead to a huge increase in the phytoplankton in our oceans. Phytoplankton are at the base of the ocean food chain. Next up is zooplankton, which eats the phytoplankton. Those in turn are eaten by everything from small fish to whales. Basically the food chain in our oceans is starting to get very rich.
The molecule in the picture is ATP synthase. You have about a trillion cells in your body which share your basic DNA. Each of these cells holds several thousand smaller symbiotic cells inside called mitochondria. Each mitochondria has several thousand copies of this ATP synthase molecule. So you have tens of millions of trillions of these molecules in your body. These molecules convert ADP, Adenosene DiPhosphate, into ATP, Adenosene TriPhosphate. Adenosene is the battery that powers your cells. The diphosphate form is when the adenosene battery is dead; the triphosphate form is charged up. The ATP synthase is the adenosene recharging station. ATP synthase is the world's tiniest motor. It spins at 6,000 RPM, the top speed allowed on your car's engine, except your car does it rarely when passing on the freeway and the synthase does it 24/7/365 non-stop. The F0 part of the synthase is bonded to your cell walls. The axle and F1 part spin and recharge three adenosene molecules per revolution. The synthase is powered by an electric current which is generated by some nearby molecules that take in oxygen and burn glucose (sugar) into carbon dioxide and electricity. Each cell in your body uses its mitochondria and synthase to recharge about 1 billion adenosene molecules per second. Synthase is an enormously complicated molecule, made up of about 6,000 amino acids or a bit more than 100,000 atoms. The exact structure of synthase has not been worked out, but it is already known that there are several amino acids which are critical: change their position by one spot or swap them for any other amino acid and the whole thing stops working. Take a piston out of your Toyota engine and substitute a piston from a Honda and your engine will die in under a second.
Suppose you took an engine from your Honda or Toyota back 100 years to Henry Ford and asked him to put it in a model T for you. This would not work at all. Perhaps he would manage to fit it into the engine compartment, but the first time you tried to drive the car the engine would rip off the motor mounts, the drive shaft would rip in two, and the rear axle would tear off the car. The Model T was designed for 20 horsepower, not 200. But actually your modern engine wouldn't even start: the modern engine requires 90 octane gasoline and in 1915 the best gasoline was about 25 octane. In the last 100 years engines, gasoline, motor oil, motor mounts, transmissions, drive shafts, axels, wheels and tires have all "evolved."
Now, suppose you took the ATP synthase molecules from your cells and substituted them into the cells of a cat. No problem, they'd work perfectly. Same thing for a fish. Or a tree. The only difference in plants is the electricity is supplied by the photosynthesis molecules. In fact, the molecules we have that convert glucose to electricity are present in the plants, but they're run backwards to take in electricity and carbon dioxide and produce glucose and oxygen, which is then used to build more plant and make fruits and berries to bribe animals to spread the plant's seeds. The same ATP synthase molecules are in moss, fungus, amoebas, bacteria, all of them use the same molecule. Everything alive on the earth uses this exact same molecule. There are no alternative simpler systems, nothing we've found that looks like an earlier version. This is it. One solution, one time, for everyone. This is a centrally planned communist molecule at the very heart of evolution's competitive capitalist system. Which begs the question: who's the planner?
If you look around you see that all animals are left-right symmetric, so you think there must have been a first animal that was left-right symmetric and we're all descended from that animal. It's thought this animal lived about 550-600 million years ago. When you see every living thing on earth sharing the exact same ATP synthase, you think that the first critter to have this must have lived about 3.4 billion years ago. So evolution tells us that cell chemistry powered by the adenosene battery, the molecules that convert glucose into electricity, and the ATP synthase all evolved in the first 100-200 million years, and absolutely nothing changed in the 3.4 billion years since then. No improvements, no alternatives, no changes, no competing chemistries, nothing. It's like every car ever made shared the same exact engine, except instead of that being true for 140 years it's true for 3.4 billion years. No hybrids, no fuel cells, no electric cars, no turbine cars, no diesel cars, no overhead cams, no turbo chargers, no fuel injection, no computer ignition, no smog controls, no changes at all. Nothing. Ever. In 200 million years or less the entire energy system of life on earth is all worked out, the proteins, the DNA, the molecules, the chemistry, and since then nothing essential has changed. This is not even remotely credible as a story of continuing evolution, of competition, of survival of the fittest. The ATP synthase molecule tells a story that's very different - to my eyes it looks a lot more like intelligent design, like the earth was purposely seeded with bacteria that came with this energy/chemistry system all worked out and we all copied that system.