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“As If It Never Happened” – Stocks, Bonds, Dollar & Gold Erase Almost All Sign Of Korea’s Missile Madness

Don't worry America - biblical floods and a world on the verge of global thermonuclear war are no reason to be fearful...

As soon as the US equity market opened, the panic protection team went into action. Gold and Bonds have erased all their gains as the dollar and stock recover all their overnight losses...

 

Amid a massive burst of helpful buying mid-morning in the S&P futures...

pic.twitter.com/r04CekyLxm

— pippocamminadritto (@guado77) August 29, 2017

And as Nanex's Eric Scott Hunsader notes, "this never happens"...

Yes -- that NEVER HAPPENS (where a spike after open comes close to the activity level set by the open) https://t.co/5PhSEZTz6G

— Eric Scott Hunsader (@nanexllc) August 29, 2017

The post “As If It Never Happened” – Stocks, Bonds, Dollar & Gold Erase Almost All Sign Of Korea’s Missile Madness appeared first on crude-oil.news.

The post “As If It Never Happened” – Stocks, Bonds, Dollar & Gold Erase Almost All Sign Of Korea’s Missile Madness appeared first on aroundworld24.com.

Oil Prices Set To Rise as Supply-Demand Gap Closes Up

Oil prices are poised to climb over the coming weeks as supply and demand approach parity, according to analysts who spoke to CNBC as the remnants of Hurricane Harvey continues to ravage Houston, the energy capital of the United States. A rise in oil demand for 2017 made large strides in closing the gap between available crude and the number of willing buyers, sources said. "[Oil prices] should be going up because inventories have been drawing at a phenomenal pace over the past few weeks and months," Amrita Sen of Energy Aspects said. Both West…

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Wellesley, Faroe spud Goanna exploration well in Norwegian North Sea

Wellesley Petroleum AS and Faroe Petroleum PLC
have spudded the Goanna exploration well 39/9-22 S on PL 881, targeting
a structural and stratigraphic prospect of Upper Jurassic Munin
formation sandstones.The post Wellesley, Faroe spud Goanna explora...

Insurance Companies Could Face Staggering $500 Billion Loss During A Crisis-Like Downturn

Here’s one more example of how central banks’ global coordinated monetary stimulus in the wake of the financial crisis has increased systemic risk in the US: According to an analysis conducted by BlackRock, insurers are more vulnerable to a market downturn now than they were ten years ago.

The reason? Ultralow interest rates have forced insurers to venture into markets with higher yielding assets, forcing them to stomach more risk along the way. Whereas insurers once tended to adhere to only the safest types of fixed-income products – typically highly rated government and corporate debt – they’re increasingly buying exposure to risky high yield and EM products, along with illiquid private equity funds, to try and boost their earnings back to pre-crisis levels.

These products carry a potentially higher reward for insurers, but heightened risks are also omnipresent. In a downturn similar to the 2008 crisis, BlackRock estimates that US insurers' holdings would drop by 11% - even more than they did during the crisis. Such a drop would be tantamount to $500 billion in losses.

“The world’s largest money manager mined regulatory filings of more than 500 insurance companies and modeled their portfolios in a similar downturn. Their stockpiles - underpinning obligations to policyholders across the nation - would drop by 11 percent on average, according to its calculations. That’s significantly steeper, BlackRock estimates, than the group’s “mark-to-market” losses during the depths of the crisis.

 

The reason is simple. Insurers needed to make up shortfalls after the crisis. But in a decade of low interest rates they had to venture beyond their traditional holdings of vanilla bonds. They now own vast amounts of stocks, high-yield debt and a variety of alternative assets - a bucket that can include hard-to-sell stakes in private equity investments, hedge funds and real estate.”

Even as interest rates rise, Zach Buchwald, head of BlackRock’s financial-institutions group for North America, said that the insurers’ appetite for riskier assets will remain because “many of the allocations are hard to reverse.”

‘There is more risk being put into these portfolios every year,’ Zach Buchwald, the head of BlackRock’s financial-institutions group for North America, said in an interview. And such shifts may become permanent, especially because many of the allocations are hard to reverse, he said.”

Which is a problem because, even though insurers claim they’re offsetting risk by “diversifying” into different types of risky assets, big losses can accrue if all of these assets were to drop at the same time – as one might expect during a “risk off” flight to quality.

“The new diversity should provide a huge benefit, according to Buchwald. After all, it was concentrations of investments in mortgage-backed securities and certain equities that proved the biggest pitfalls during the crisis, a study by the Organization for Economic Co-operation and Development found.

 

But even piles of investments that appear diverse can suffer big losses if care isn’t taken to ensure the assets won’t drop at the same time.”

The BlackRock study was an attempt to market its new “Aladdin” analytics software.

“BlackRock examined the insurers’ holdings as it pitches a service called Aladdin. It’s trying to sell the companies analytics and advice, helping them test how complex portfolios may perform under various conditions, so they can design them to withstand catastrophe.”

According to Bloomberg, the study has been published at an “interesting time” for markets.

“The assessment comes at an interesting time. With U.S. stocks trading near record highs and the Federal Reserve starting to unwind years of extreme measures, there’s a raging debate on Wall Street over whether a big correction is looming - and if so, whether unforeseen faults in financial markets might crack open, as they did a decade ago.”

Mohamed El-Erian, chief economic adviser at German insurance conglomerate Allianz, warned that “non-banks” are increasingly reaching for high-yield bonds without regarding the risks.

“The strong ‘quest for yield’ remains visible in non-banks,” Allianz SE Chief Economic Adviser Mohamed El-Erian said in a Bloomberg View column this month. The group, which typically includes insurers, has pushed into asset classes “including what most deem to be a stretched market for high-yield bonds.”

Some insurers, like Athene Holding, have bragged about the outsized returns from their riskiest investments.

“Athene Holding Ltd., an insurer that leans on Apollo Global Management to oversee investments, is wagering on complex, hard-to-sell debt. Its alternatives portfolio, representing about 5 percent of total holdings, posted a 12.3 percent return on an annualized basis in the second quarter.

 

It’s among a handful of insurers backed by private equity firms betting they can earn better returns than peers focusing on traditional investments. But even MetLife Inc. and Prudential Financial Inc., two of the oldest and largest life insurers in the U.S., have said they’re pushing into commercial property bets and private market debt in search for yield.”

When insurers invest in illiquid products like a private equity fund, they need to hold more capital on their books to offset the risk – money, that, as Bloomberg points out, “isn’t free.” After adjusting for the reverse capital, BlackRock found that the high-flying PE returns weren’t as spectacular as some insurers believed.

“BlackRock’s study showed that the industry’s forays into alternative investments haven’t always delivered yields on par with what the underlying money managers project. Insurers have to hold large amounts of capital against the investments they make -- money that isn’t free. When adjusting for those charges, private equity returns are generally less than 4 percent, whereas they would have been above 6 percent.

 

That, according to BlackRock, indicates insurers would probably earn more on investments in mezzanine real estate debt and high-risk equity investments in global real estate and other real-asset financing.”

Since the crisis, insurers have increased PE investments by 50%, despite the lower risk-adjusted returns highlighted by BlackRock. Maybe some of them SHOULD consider buying the asset-manager's new software…

“After experimentation with different assets, some insurers have shifted wagers. By the end of last year, the industry’s funds held in private equity had soared 56 percent to $56 billion from 2008. That trend is leveling off, Buchwald said.

 

Real estate investments, meanwhile, hit a seven-year high in 2015, then dropped by $7 billion the next year to $42 billion. Hedge fund holdings spiked to $24 billion in 2015, only to drop to $18 billion the next year. MetLife and American International Group Inc. were among those that began changing strategies.

 

The key is to find “other, more predictable income generators,” Buchwald said, ‘things like infrastructure and real estate.’”

Whatever their risk tolerance, a growing number of market strategists believe that the next sharp downturn in markets could begin as soon as this year. This would mark the first real test of insurers’ capital cushions since the crisis. And, particularly if it triggers a wave of defaults in the high-yield sector (or even among European sovereigns), a market rout could wipe out trillions of dollars worth of insurance company holdings.

Let’s hope that – for their sake - when the other shoe drops, insurers are ready. With Republicans controlling the White House and both chambers of Congress, failing insurers likely won’t receive the same type of bailout that AIG did during the crisis.  

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US refiners brace for more punishment from Tropical Storm Harvey

Some Texas refineries are aiming to restart, but many remain in the path of Tropical Storm Harvey.

crude oilThe post US refiners brace for more punishment from Tropical Storm Harvey appeared first on crude-oil.news.
The post US refiners brace for more...

“Liberal Socialism” – Another False Utopia

Authored by Richard Ebeling via The Mises Institute,

Very often bad and failed ideas do not die, they simply reappear during periods of supposed social and political crisis in slightly different intellectual garb, and offer “solutions” that would merely help to bring about some of the very types of crises for which they once again claim to have the answers. Socialism in its various “progressive” mutations represents one of the leading ones in our time.

The latest manifestation of this appeared on August 24, 2017 in the New Republic online in an article by John B. Judis on, “The Socialism America Needs Now.” He is heartened by the wide appeal, especially among younger voters, that Bernie Sanders received during the 2016 presidential contest. He thinks that this may herald a rebirth and a renewed possibility for a socialist alternative to the current American political and economic system.

Having traveled over the decades from the 1970s to the present from being a radical, revolutionary socialist to a more “moderate” one today, Mr. Judis admits that the Marxian-style socialism of the nineteenth and the first half of the twentieth centuries is now long passé. The embarrassing experience of “socialism-in-practice” in the form Lenin and Stalin created in the Soviet Union or by Chairman Mao in China will not fly anymore.

From Soviet Central Planning to “Liberal Socialism”

Central planning seemed not to work too well, and the “communist” variation on the socialist theme also had a tendency to be “authoritarian” with some drawbacks for human life and liberty. (He tactfully avoids mentioning that Marxist-inspired regimes in the twentieth century murdered well over a 100 million people — with some estimates suggesting the number might have been closer to 150 million or more in the name of building the “bright, beautiful socialist future.” See my article, “The Human Cost of Socialism in Power”.)

He turns his mind and ideal to the “democratic socialist” parties and regimes in Western Europe in the post-World War II era, or as Mr. Judis prefers to call it, following John Maynard Keynes, “liberal socialism.” What makes this form of socialism “liberal”? It is belief that there can be a “socialism with a human face.” In other words, a form of “economic” socialism that leaves in place democratic politics with a respect for a broad range of personal and civil liberties.

We have heard this all so many times before. While Mr. Judis wishes to suggest that there is no real or definitive definition of “socialism” (any more than there are of “liberalism” or “democracy”), the fact is that throughout the nineteenth century and well into the twentieth, virtually all socialists condemned and called for the abolition of private ownership of the means of production, and in its place some form of socialist central planning directed by government in the name of “the people.”

Mr. Judis actually more or less admits this, and that the only great debate among socialists and communists in the late nineteenth and twentieth centuries was over how the socialist utopia would be brought about – through violent revolution or through the democratic ballot box. The Russian Marxists led by Vladimir Lenin insisted that only revolution and a “dictatorship of the proletariat” could bring “the workers” to power and assure their permanent triumph over the exploitive capitalist class. The German democratic socialists opted for democratic means to power and rejected the dictatorship of Lenin and later Stalin.

But it is nonetheless the case that well into the post-World War II period this was a dispute over political means and not ideological ends, which remained for both branches of the socialist movement the abolition of capitalism and the imposition of socialist central planning. Communists wanted to bring about this transformation of society in one fell swoop through violent means and imposed dictatorship. The German Social Democrats and the “Fabian” socialists in Great Britain proposed democratic means, with socialism coming more gradually and through incremental extensions of government control and planning over more and more parts of society. But for both, the end result would be the same: centralized government direction of economic affairs and social change.

As the 1950s turned into the 1960s and 1970s, more and more “democratic” socialists in Western Europe grudgingly accepted the fact that comprehensive socialist central planning was a failure as practiced in the Moscow-dominated Soviet bloc countries; and it brought little of the prosperity that government planning promised to provide as an escape from poverty in the “third world” countries of Asia, Africa and Latin America. Plus, the tyranny and brutality of Soviet-style socialism made it ethically difficult to defend. So the democratic socialists turned to the interventionist-welfare state to achieve their “social justice” ends without nationalizing all the means of production or centrally planning all economic activity in society. (See my article, “Barack Obama and the Meaning of Socialism”.)

In Search of Socialist Utopias Elsewhere

But those communist regimes were not so repulsive that many, if not most, of these democratic socialists in the West would not continue to still give moral indulgence and wishful hopes that, maybe, somehow, Marxian socialism would still finally work and fulfill its promise in, first, Mao’s China, then in Castro’s Cuba, or Ho Chi Minh’s Vietnam, or in the Sandinista’s Nicaragua, or . . . The collectivist dream and delusion springs eternal. Plus, after all, even a rude, crude and rough Marxist regime isn’t the United States – please, please almost anything other than capitalist America!

Even today, the enlightened “progressive” can take a tour of Castro’s Cuba with the leftist magazine, The Nation. Don’t miss out! This November 2017 you can go with The Nation and, their advertisement promises, “learn about the Cuban Revolution from experts at some of its most pivotal locations, including the Moncada Barracks, the site of the first armed assault by Fidel Castro and his band of rebels on July 26, 1953.” The progressive political pilgrim to the collectivist promised land will be spending his or her “days meeting with prominent Cuban professors, government officials,” including “urban planners” and “health care workers.” Don’t miss on your chance to visit one of the remaining socialist “utopias” before global capitalism succeeds in taking it away.

No doubt, these “social justice” tourists will not be taken to La Cabana prison, where Che Guevara was assigned by Castro the role of state prosecutor against “enemies of the people,” following Fidel’s triumphant entrance into Havana and seizure of power in January 1959. In the role as unrestrained judge and jury, Che arbitrarily sent hundreds to their death, sometimes literally by his own hand.

Nor are they likely to have quoted to them Che’s words that, “My ideological training means that I am one of those people who believe that the solution to the world’s problems is to be found behind the Iron Curtain.” And that “I can’t be the friend of anyone who doesn’t share by ideas.” Or that Che was the one who in 1960 instituted communist Cuba’s system of forced labor camps. This would not fit in with the heroic face of Che on the t-shirts that, no doubt, some of these “progressive” travelers to utopia would be wearing. After all, Fidel and Che did it all for “the people,” and, well, they did have “good intentions.”

Of course, while such political pilgrims are pleased to visit these places and bask in the moral satisfaction that the few remaining communist regimes in the world are still trying to make that “better world,” even if with the heavy hand of dictatorship, censorship of art, music and political views, the imprisonment of political opponents, and torture and execution of “enemies of the people” (all of which they still mostly turn a blind eye), they prefer to live in their own Western countries and dream the “liberal socialist” dream, as clearly Mr. Judis is doing.

Liberal Socialism as the Regulatory and Redistributive State

What, precisely, is this democratic or “liberal” socialism to which Mr. Judis hopes a younger generation of Americans will turn in the years ahead? It turns out to be the same “utopia” of the interventionist-welfare state that Western countries have been following since the end of the Second World War, though, admittedly, to different degrees in different places around the world.

Mr. Judis wants the government to intensively and pervasively regulate, command, restrict and direct various aspects of the private enterprises in society, while assuring that American society can still take advantage of the self-interested incentives and innovations that can improve the material conditions of life. But the direction, form and extent to which private enterprisers shall be allowed to do those productive and innovative things with their businesses will be confined to and constrained within those avenues that serve the “higher” and “non-market” values and purposes of “society.”

Matching the regulatory and interventionist state must be the redistributive welfare state. The excessive and unnecessary income and wealth of the businessmen and private sector investors of America must be taxed, and heavily, to assure greater material egalitarianism, and to fund all the social services and government-provided safety nets, which “would bring immeasurable benefit to ordinary Americans. A good watchword is economic security – something that is very lacking to all except the wealthiest Americans.”

At this point, it might be wondered what, then, marks off Mr. Judis’ “liberal socialism” from the already existing modern American “liberal” interventionist-welfare state? It turns out that it is all a matter of intentions and the intended recipients. In Mr. Judis’ view, mainstream modern American liberals have lost their way; they too frequently sleep with the enemy (think Bill and Hillary Clinton) in the form of excessively collaborating with businessmen and bankers to the latter’s benefit; American liberals and progressives have stopped sufficiently emphasizing “economic justice” for middle America with their increasingly primary focus on “identity politics.”

Liberal Socialism and Democratic Politics Without Romance

Also, unlike the communists and many radical socialists and some progressives, Mr. Judis calls for moving towards his notion of a better socialist future through a more active participation in the Democratic Party. The task is to nudge and shove mainstream modern American liberals in the Democratic Party further to the socialist left, which in many of their hearts these people already know is right. And to use the Democratic Party as the vehicle to propagandize and persuade more in society that socialism is good and just and the best for them.

In other words, Mr. Judis calls for using the methods of the earlier German Democratic Socialists and the British Fabians, only do so in a way that does not seem to be as threatening or undermining of all the institutions of existing society as those earlier groups often did with their call for the total abolition of capitalism.

Mr. Judis’ “liberal socialism” is really just the existing interventionist-welfare state placed – “democratically” – in the “right” elected hands, so those manning and managing the machinery of government will do what he wants political authority to do, rather than what it is currently being done by Republicans and the current Democratic Party establishments.

A way for Mr. Judis to more easily defend his desire and ideal is to suggest that the existing political-economic system in America today is a free market, “neo-liberal” capitalism, rather than what the Italian economist, Vilfredo Pareto once more accurately labeled it: “bourgeois socialism.” That is, a system of government regulation, redistribution, favors and privileges that benefits many in the private enterprise sectors of society rather than a more “proletarian socialism” that simply would take from “the rich” to give to “the workers” and “the poor.”

What is sometimes called “crony capitalism” is just Pareto’s “bourgeois socialism.” Pareto also understood, in the 1890s, with amazing clarity one of the insights of modern Public Choice theory, that “participatory democracy” of the community as a whole is a theoretical and practical illusion in an complex society. Politics in an unrestrained democracy always becomes a contest among special interest groups capable of gaining concentrated benefits from State intervention and redistribution at the diffused expense of the rest of the society.

In democratic societies it takes the form of coalitions of special interest groups who succeed in offering campaign contributions and votes to politicians desiring elected political office, who then fulfill their campaign promises to those groups once in the actual halls of political power. In totalitarian societies such as in the former Soviet Union, it took the form of hierarchical position within the Communist Party and within the central planning bureaucracy, including the state enterprise managers, who had the decision-making power over access to and use of the socialized means of production; thus, the communist “classless society” had one of the most intricate social webs of power, privilege, favoritism and plunder ever seen in human society.

This “politics without romance,” to use Nobel Laureate, James M. Buchanan’s phase, shows why the notion of “the people” owning, controlling, regulating and overseeing the collective direction of an economy is pure illusion and deception concerning the reality of how and why political power works the way it does.

What Mr. Judis and, far too many who share his views about capitalism and some form of socialism – “liberal” or otherwise – fail to understand is that any and all forms of planning, regulation and political redistribution in fact takes power and decision-making out of the hands of the people about whom they express their concerns.

Real Participatory Liberation under Free Market Liberalism

It is the open, competitive market economy that, precisely, gives each and every individual wide latitude and liberty over his own personal affairs. It is the market that enables each of us to make his own choices concerning the profession, occupation or productive calling to pursue. It is the market that enables each and everyone of us to have the freedom to make our own choices to earn an income and spend that income as we consider best in terms of the values, beliefs, purposes and desires that we think may bring meaning and happiness to our individual lives.

It is the free society of individual liberty and voluntary association that provides truly participatory opportunities to form organizations, clubs, and groupings of almost any type to further the goals and ends outside of the narrower arena of market transactions to better our lives materially, socially, culturally and spiritually. (See my article, “Individual Liberty and Civil Society”.)

At this point, no doubt, Mr. Judis would reasonably ask, but what about those who are unable to provide for themselves, due to personal tragedy, unfortunate circumstances, or simply bad luck? Is this not the reason why enlightened and decent societies had to move “left-ward” to establish and financially provide for those unable to personally meet the essentials of everyday life and to have opportunities to fulfill their potentials as a human being? Is not the welfare state of “liberal socialism” the inescapable necessity of having a humane society?

The classical liberal responds that these very concerns can be far better and more successfully solved and served through the voluntary institutions and associations of civil society than to turn such tasks over to the government. In the nineteenth and early twentieth centuries, before the modern welfare state, all such “social problems” were handled with wide and positive affect by charities, philanthropies and for-profit organizations in places such as Great Britain and the United States. That their workings and successes are virtually unknown to most people in modern society shows the extent to which their history and social nobility has gone down a memory hole of collectivist misinterpretation and misunderstanding of what a society of liberty did and could provide. (See my article, “A World Without the Welfare State”.)

Furthermore, the transfer of such welfare responsibility to the government reduces each and every recipient to a ward of the State. It is politicians and bureaucrats who decide the education your children will receive in government schools; they are the ones who determine the retirement possibilities you will have; the healthcare to which you will have access and its type; the wages and work conditions under which you may be allowed to employed or unemployed, and the forms and types of associations you may enter into and the activities and membership you permitted.

The “liberal socialism” about which Mr. Judis dreams is not the path to liberation but a continuing servitude and obedience to the those with political power and who have the arrogance and presumption to imagine that they know better how people are to earn a living, care for their own lives and that of their families, and associate with other members of society better than those individuals deciding all of these matters for themselves. (See my article, “Democratic Socialism Means Loss of Liberty”.)

One would have thought that after more than seven decades of the interventionist-welfare state as the political left’s “liberal socialist” alternative to Marxian socialist central planning, it would be realized that it is just another constraining and corrupt manifestation of the unworkability of any collectivist system of control and command.

Mr. Judis’ program for a socialist America also shows the intellectual bankruptcy of those on “the left.” The revolutionary transformation of society, for which they yearn, ends up being nothing more than the existing interventionist-welfare state, just with the desire that people who agree with Mr. Judis should be at the helm of political power rather than those with whom he disagrees.

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Saudi Arabia Shortlists 25 Bidders For First Utility-Scale Wind Plant

Saudi Arabia has shortlisted 25 companies that qualify to bid for proposals to build a 400-MW wind power plant in the northern part of the Kingdom, in what would be the first utility-scale wind power project, the Renewable Energy Project Development Office (REPDO) of Saudi Arabia’s Energy Ministry said on Tuesday.   REPDO has qualified 25 companies—including major players in renewables such as Acciona, Enel Green Power, EDF Energies Nouvelles as well as technology giants such as GE, units of Siemens, Marubeni, and Mitsui, among…

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U.S. Crude Oil Cargo Delays Prompt Turn To Spot Market

Delays in the delivery of U.S. crude oil cargoes to Asian refineries are prompting traders to consider buying feedstock for refineries on the spot market, sources from the industry told S&P Global Platts. According to one oil trading manager from North Asia, at least two South Korean refiners and one Chinese plant are expecting their cargoes, consisting of Eagle Ford crude as well as Mexican blends, to arrive with a delay of between one and two weeks. Traders and refiners who had bought Mexican crude are also bracing for delays in…

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Latest Barents Sea gas discovery not the ‘direct hit’ Statoil expected

Despite the success of its Kayak discovery and traces of oil in the
Gemini North, Statoil ASA says its latest Korpfjell well in PL859 came
in as a noncommercial gas discovery.
Jez Averty, Statoil’s head of exploration in Norway and the UK, said,
“We have so far not had a direct hit that may result in a new standalone
field development.”

The post Latest Barents Sea gas discovery not the ‘direct hit’ Statoil expected appeared first on aroundworld24.com.