Financial Crisis III: Stores of Precious Metals in Trusts and Funds - Junk Bond and Credit Market Concerns

Here is the state of the gold and silver holdings in trusts and funds.

In other matters, there were two articles about risks in the credit markets that caught my eye this weekend.

These *could be* stories spread by market operators who are hoping for turmoil in the junk bond markets.

Or on the other hand this could be signs of something which some have feared would be approaching, as we seem to keep repeating the behaviours that prompted the last two financial crises this century.

The truth is hard to discern these days— it has few friends, and even fewer willing to stand for it.

Nevertheless, I thought it would be appropriate to bring them to your attention, for what it is worth.

Greenwich Time, A New Credit Bubble Gets Ready to Burst, May 31, 2019

The Street, U.S. Officials Meet in Secret Over Junk-Loan Frenzy as Recession Alarms Flash, June 1, 2019

M2 Money Velocity Began Dying in 1997 And What That Means For Us

It is correct to say that money velocity does not do anything.  It does not do anything in the way that the speedometer on your car does not do anything.    But it is an important measurement, a ratio of the amount of money being created and it relationship to productive, organic growth in the economy.

And it is well known that money velocity peaked in 1997, and has been in a steady decline since then.  It is now at lows never seen before in the US economy.  It, like the implications of the long term stagnation of median household income, remains largely unremarked, and if noticed, excused away as unimportant.

Why is this?

Below is a recent article from Anthony Sanders of George Mason University that makes a good case that it has to do with the 'bubble economy' which began with the expansion of the money supply to promote housing ownership.

Tony is an expert on financial aspects of housing, among other things, and as you know I follow what he writes closely.  He knows more about these things than anyone that I know.  And he says what he means and means what he says, which is a sometimes neglected principle among mainstream economists these days.

But as I have a slightly different perspective on that period of time,  I would take this a step further and draw a admittedly broader, less specialized conclusion.   The article does not account for the massive tech bubble, which at the time was covered by the fig leaf of a 'new era internet economy,' giving it the name of the dot-com bubble, with which I happened to be intimately familiar.

Who can forget Chairman Greenspan's irrational exuberance speech which shanked the stock market in December of 1996.

Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past.

But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?

Alan Greenspan, The Challenge of Central Banking in a Democratic Society, 1996-12-05

As it turned out, Chairman Greenspan was blinded by ideology, as he himself admits years afterwards, never seeing a bubble that he didn't like.  But his successors have followed the same sorry route of feeding the financiers to the detriment of the broader economy.

The problem was not the mortgage credit bubble per se, but rather the policy bias towards managing and regulating the economy itself, with an aggressive expansion of the money supply under Alan Greenspan (remember the Y2K scare) and Treasury Secretary Robert Rubin, along with bubbles in the usual suspects, in this case the financialization of housing and the tremendous bubble in the equity markets.

Do you recall the Time Magazine cover from 15 February 1999?   The Committee To Save the World?

And how can we forget the Rubin doctrine of propping up the financial markets using the SP 500 futures before the fact, which he thought was cheaper than cleaning up the mess of a market crash after the fact.  Remember The Working Group, aka The Plunge Protection Team, housed within the Exchange Stabilization Act, that came out of the scarring experience of the Crash of 1987, which itself was a precursor to the woes created by weakly regulated, artificially exotic financial instruments and mispriced risks?

A crisis is a very effective mechanism for enabling the abuse of power.

And let us not forget the overturning of Glass-Steagall in a decades long campaign richly underwritten by the Wall Street Banks, and the infamous Gramm-Leach-Bliley Financial Services Modernization Act of 1999.

In 1999, on signing Gramm-Leach-Bliley into law, Clinton said, 'This is a day we can celebrate as an American day' and that 'the Glass-Steagall law is no longer appropriate for the economy in which we live' and 'today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority' and 'This is a very good day for the United States.'

Columbia Journalism Review, Bill Clinton on Deregulation

One might say by way of analogy that Reagan made the nest, and Clinton laid the egg.  But both Bush II and Obama have nurtured this chimera economy along.  And we can have every expectation that the political establishment will continue to do so in the next presidency.

"It comes as a surprise to many people that, despite the fiasco at Citigroup and his role in causing the subprime mess, Rubin remains inside the circle at the White House. Nearly two decades after first migrating to Washington, he apparently is still calling the shots of U.S. financial and economic policy with the full support of President Barrack Obama.

Working through his favorite marionettes, Treasury Secretary Tim Geithner and Economic Policy Czar Larry Summers, most recently Rubin managed the defense of Wall Street following the great crisis. No matter what Secretary Geithner says or when he says it in public, you can be sure that those utterances have the full knowledge and approval of his handler Larry Summers and their common political owner and sponsor, Robert Rubin.

Chris Whalen, The Institutional Risk Analyst, 29 June 2010

The causes for this are debatable and many, and I have considered it here many times as the credibility trap,

What we have now, an economy based on artificial support market resulting in a series of asset bubbles and crashes, with a growing inequality in income distribution.  This is the natural outcome when a policy body decides to manage or 'stimulate' the economy by shoving freshly minted dollars top down through a weakly regulated, increasingly corrupt financial system whose outsized and largely unproductive profits act like a private tax on the real economy.  It enriches a few, and enervates the productive working class.

This is why I have said that until there is financial and political reform, there will be no sustainable recovery.  And the longer this continues, the more that the organic productivity of the economy will decline.  And the more socially explosive the situation may become.

"Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population.   Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy.   These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.

If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism.

Charles Ferguson, Predator Nation

I have little expectation now that reform will come from within.  The power of the status quo is too great, and too prone to rewarding those who serve it, and silencing and impeding those who oppose it by progressive reform.

"'After dinner, 'Larry [Summers] leaned back in his chair and offered me some advice,' Ms. Warren writes. 'I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want.  But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas.  People — powerful people — listen to what they have to say.  But insiders also understand one unbreakable rule: They don’t criticize other insiders.'

I had been warned."

Elizabeth Warren, A Fighting Chance

How can we have missed this element of self-serving preservation of the status quo so broadly on display in the run up to our recent presidential election?

'Stimulus' in itself is no panacea.  It must be productive and targeted towards increasing aggregate demand within a healthy economy which distributes the rewards for productive efforts broadly amongst its participants.

Whether it is affordable housing, infrastructure project such as roads, bridges, and modern power grids, the general improvement of the environment,  or the expansion and improvement of those basic elements of a culture than lend value to peoples' lives, any project which can be considered stimulative can and will be turned into an unproductive boondoggle by a corrupt financial and political system.  They contaminate everything that they touch.

And so I continue to make the observation that significant financial and political reform are the sine qua non for a genuine economic recovery.

Doing more of the same may make no sense, may even seem neurotic. And if it seems to defy common sense, that is because it does.

But it has one very special thing going for it. It has been and still is richly rewarding to a small group of very powerful people, something which we have seen repeatedly throughout the developing world, and even in the gilded, boom and bust eras of this country before.

"The crash has laid bare many unpleasant truths about the United States...

Recovery will fail unless we break the financial oligarchy that is blocking essential reform."

Simon Johnson, The Quiet Coup, May 2009

Confounded Interest
Dying Money Velocity Began in 1995 with Massive Mortgage Credit Expansion

M2 Money Velocity (GDP/M2 Money Stock) peaked back in Q3 of 1997. And it has mostly gone down hill from there.  As of Q2 2016, M2 Money Velocity is at the lowest point in history.

Why?

One explanation for the decline in velocity is the decline in labor force participation since early 2000 when labor force participation peaked.  Fewer people participating in the labor force (as a percentage of the population) makes it more and more difficult to maintain velocity since GDP is lower despite the expansion of money.

Why is labor force participation declining? First, our population is aging and more and more people are retiring. Second, more and more students decided to attend and/or stay in school given the lousy jobs market.  Third, some people have just given up trying to find a job and would prefer to rely on the state for food, housing, healthcare, etc.

A closer look reveals some bad AND good news. Labor force participation for ages 25-54 has been declining since 2007 (but showing some improvement in 2016). On the other hand, LFP for ages 65 and above (many of whom were pushed back into the labor force as a result of the financial crisis and housing bubble burst) has been growing steadily since 2008.

Actually, the economic world turned before labor force participation peaked in early 2000 and M2 Money Velocity peaked in 1997.  A key economic indicator, core personal consumption expenditures YoY,  was above 4% in the early 1990s only to fall to around 2% around 1995 prompting the Clinton Administration to enact policies leading to a dramatic increase in mortgage credit (creating a credit bubble) as a stimulative measure. This was the Clinton National Homeownership Strategy: Partners in the American “Dream.” nhsdream2 That turned into a nightmare for millions of American families.

1995 was the beginning of the incredible housing credit bubble that catastrophically exploded in 2008.

Core personal consumption expenditures (cPCE) YoY sagged after 1989 and hit 2% by mid 1990s and has struggled to reach 2% on a consistent basis ever since. As a result, GDP has been compromised and the massive expansion of mortgage credit helped created a massive house price bubble which burst … and things have never been the same since.

And with the fall of the House of Usher cards, mortgage equity withdrawal has fallen as well (putting a damper on personal consumption expenditures.

Remember, housing is a consumption good (to serve as shelter), not a productive asset like a factory. Trying to create economic growth through housing is a poor choice. So much so that The Federal Reserve is left blowing asset bubbles instead of stimulating actual economic growth.

The Epicenter of the Next Global Financial Crisis - Financial Dreadnoughts

The 'trigger event' for the next crisis could be elsewhere, someplace distant, and out of the way.  The first World War was ignited by a political assassination over a fractious disagreement in Sarajevo that engaged an international web of interconnections.

 

Granted that hubris was on a high note, particularly in Germany, and the system itself was fragile and deeply interwoven.

In the current global financial scenario, if the ripple of global interconnectedness reaches the New York (and European NationalBank Holding Companies), then the real crisis can take root and begin to knock down banks and national economies around the world.

12 Systemic Importance Indicators For US Bank Holding Companies

At that point the only rational response by the government would be to nationalize these Banks, and begin their orderly restructuring with losses ringfenced to investors and principals and creditors.

 

Of course that might not happen, since that was also the only rational response in 2008, and political power and influence and soft bribery prevailed.    And there has been very little reform, with the Too Big To Fail Banks becoming Too Big To Jail, and the real lords of the land.

 

Why do democratically organized nations allow such behemoths to grow even larger, and act with virtual impunity over the laws, and imperil their national health and welfare.   Because these outlandish financial monstrosities are the new battleships in a financial landscape in which political will controls money and wealth in ways never before seen, but far too often for the private gains of commercial moneyed interests.  War never changes.

And like the dreadnoughts from the last wars of the 20th century, they are already anachronisms, costing much more than they are worth.  The generals always seek to employ the old methods of warfare, even on unfamiliar landscapes.

 

Next time it looks like not only a 'bailout' but a 'bail-in' as well.   And the destruction of a free and honest financial system in the US will be complete.

 

Special thanks to Wall Street On Parade For this chart and the report link.

 

 

Moral Hazard: The Abysmal Failure of the Doctrine Of Selective Justice For Finance

Moral Hazard - In economic theory, a moral hazard is a situation in which a party is more likely to take risks because the costs that could result will not be borne by the party taking the risk. In other words, it is a tendency to be more willing to take a risk, knowing that the potential costs or burdens of taking such risk will be borne, in whole or in part, by others. A moral hazard may occur where the actions of one party may change to the detriment of another after a financial transaction has taken place.

Wikipedia says that Economist Paul Krugman described moral hazard as "any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly."

Moral hazard is not only the misallocation of risk, but the mispricing of risk without significant consequences as well.  This also speaks to the misallocation of risk. As in a bubble.

In our most recent financial crisis we saw both the mispricing of risk in the initial collateralized debt obligations that fed the housing price bubble, and in the aftermath, where much of the consequences of the ensuing financial crisis were allocated to the taxpayers after the fact and without an explicit prior agreement to do so, under duress.

A rather sophistic defense of that approach and subsequent policy was provided by Larry Summers who in September of 2007 wrote an article entitled Beware of Moral Hazard Fundamentalists:

"In the financial arena the spectre of moral hazard is invoked to oppose policies that reduce the losses of financial institutions that have made bad decisions. In particular, it is used to caution against creating an expectation that there will be future 'bail-outs'."

As an aside, when I saw the new 'reform President' bringing in Timothy Geithner, Hank Paulsen, and Larry Summers to key posts in his administration, I suspected that the people's mandate for reform had been deflected, although there was the prior example of FDR bringing in Joe Kennedy to spearhead the SEC.  But, alas, Obama quickly turned out to be no Franklin Roosevelt, but a loyal member of the Wall Street wing of the Democratic Party.

And here we are, SEVEN years later. Forget 'future bailouts.' We have what seems to be never-ending bailouts, and subsidies, and special arrangements, and deals benefiting Wall Street, to the detriment of almost everyone else.

Here is a video of Senator Elizabeth Warren from yesterday's testimony in a hearing chaired by Senator Tim Johnson (D-SD) “Wall Street Reform: Assessing and Enhancing the Financial Regulatory System.”  

She begins by questioning Fed Governor Daniel Tarullo.  As you may recall, the Fed is one of the primary banking regulators, acquiring even more and broader regulatory powers in the aftermath of the 2008 financial crisis.

Her second question about the TBTF Banks and failure resolutions goes to FDIC Chair Martin J. Greenberg.

Near the end is a long statement/question from Senator Richard Shelby of Alabama. 

I bring this to light, in order to respond to those who say that the banking system has already been reformed.   It has not.

It is only 11 minutes in length and is worth watching. You can see it in its entirety here.

Special thanks go to Pam Martens for bringing these quotes to light in her excellent article, Jamie Dimon Gets $8.5 Million Raise for Illegal Conduct at JPM. I had not yet found a proper transcript. Pam's articles are consistently timely and of high content value.

“As Judge Rakoff of the Southern District of New York has noted, the law on this is clear. No corporation can break the law unless an individual within that corporation broke the law. (unlike some recent delusions from the Supreme court about the inalienable rights of soulless, disembodied Corporations which are constructs merely of common law with no superior claim to a higher authority equal to an individual's rights - Jesse)

Yet, despite the misconduct at these banks that generated tens of billions of dollars in settlement payments by the companies, not a single senior executive at these banks has been criminally prosecuted. Now, I know that your agencies can’t bring prosecutions directly, but you’re supposed to refer cases to the Justice Department when you think individuals should be prosecuted. So, can you tell me how many senior executives at these three banks you have referred to the Justice Department for prosecution?...

After the savings and loan crisis in the 1970s and 1980s, the government brought over a thousand criminal prosecutions and got over 800 convictions. The FBI opened nearly 5,500 criminal investigations because of referrals from banking investigators and regulators.

The main reason we punish illegal behavior is for deterrence; to make sure that the next banker who’s thinking about breaking the law remembers that a guy down the hall was hauled out of here in handcuffs when he did that.

These civil settlements don’t provide deterrence. The shareholders for the company pay the settlement; senior management doesn’t pay a dime. And, in fact, if you’re like Jamie Dimon, the CEO of JPMorgan Chase, you might even get an $8.5 million raise for negotiating such a great settlement when your company breaks the law.

So, without criminal prosecution, the message to every Wall Street banker is loud and clear: if you break the law you are not going to jail, but you might end up with a much bigger paycheck.

No one should be above the law. If you steal a hundred bucks on Main Street, you’re probably going to jail. If you steal a billion bucks on Wall Street, you darn well better go to jail too.”

Modern Money: A Study In Confidence and Crisis

"Those who think there is little risk of a levy being imposed on other periphery members are missing the point. The seeds of doubt have been planted. As a saver facing zero yields on deposits and a potential haircut, why keep your savings in a bank? Sure it is convenient for electronic transactions, but individuals can adapt easily. As one of my more amusing colleagues put it, 'mattresses now hold a 10 per cent premium.'"

Ben Davies, Cyprus, Oh the Irony!


"Making small-scale savers pay is extremely dangerous. It will shake the trust of depositors across the Continent. Europe's citizens now have to fear for their money...

The Spaniards, Italians and Portuguese may not run to the banks today or tomorrow, but as soon as the crisis intensifies in a euro-zone country, the bank customers will remember Cyprus. They will withdraw their money and, by doing so, intensify the crisis."

Peter Bofinger, 'Europe's Citizens Now Have to Fear for Their Money,'  Der Spiegel, 18 March 2013

Modern money is a game of confidence, an arrangement based wholly on the perception of value founded in counterparty risk.

This sounds easy enough, but what is surprising is how few people really understand it. This is due to the illusion of the familiar.

We are so accustomed to using money in our daily lives that we give little thought to what it really is.  It seems solid, immutable, and lasting.  'As sound as a dollar.'

We forget that money, like much of society, is a man-made, artificial construction based on a series of agreements. Sometimes those agreements are based on implied force, such as punishment for breaking the laws. But by and large the enforcement is not equipped to deal with all but the outliers to a general compliance with the law. This is, of course, the basis of the power of civil disobedience, and why autocracies are so sensitive to any mass demonstrations of dissent.

The President of Cyprus, Nicos Anastasiades, recently elected from the conservative DISY party, blanched at the original bailout deal offered by the troika, the European Commission, the European Central Bank, and the International Monetary Fund, to assess a levy only on the non-guaranteed deposits in the troubled Greek banks, which are those deposits in excess of €100,000.

He proposed instead to limit the levy on large deposits to 9.9%, and to make up the difference by violating what had been the general guarantee in Europe by assessing a lesser amount, of about 6.7%, on the 'guaranteed deposits' of less than €100,000 by small savers.  That the troika did not blanch at the prospect of violating what had been a generally established EU policy to ensure bank stability speaks volumes about their cravenness.

The arrangement was made all the more clever by promising equity in the (worthless) banks in return for the levy, and perhaps even a guarantee of return based on 'future natural gas discoveries' which seem to be of much less value to the EU and the government.

This was one of their conditions for a €10 billion loan to the government under the European Stability Mechanism (ESM). The other involved the usual austerity measures, which are a favorite of the International Monetary Fund.

The austerity proposal had been revealed last November and include cuts in civil service salaries, social benefits, allowances and pensions and increases in VAT, tobacco, alcohol and fuel taxes, taxes on lottery winnings, property, and higher public health care charges.

The troika did not care about the details of the levy as long as the 'bail in' by depositor funds occurred. This was a sacrifice of a general European principle and was a serious policy error.

When this 'levy' on bank deposits was revealed over the weekend during a bank holiday, because it had to be submitted to a vote by the Cypriot Parliament, there was a general revulsion expressed amongst the markets and the people of Cyprus at such blatant misuse of the money power.

Monetary inflation, such as had been used in the US and UK, is more often used because so few people see their loss as blatantly as when the government simply confiscates 10 percent of their wealth on deposit. It is much easier done in smaller amounts, over longer periods of time. But one needs to have their own currency to do it.  These days monetary policy and inflation is merely the continuation of bank fraud and plunder by other means.

By the way, this is why I thought the 'platinum coin' of a notional and whimsical trillion dollars in value was such an awful, dangerously cynical idea. It exposed the farce of monetary inflation in too great an amount, in too short a period of time, in a way in which too many people would readily understand it.  And it therefore had the potential of fomenting a money panic.

Cyprus had been reasonably stable before the financial collapse, but was rocked by the Greek bond restructuring. What dealt a fatal blow was the impediment to borrowing because of a credit downgrade to BB+, which made the Cypriot bonds unacceptable as collateral to the ECB, and certainly not viable on the public markets.

And like many small, warm weather island nations, it's economy was overly dependent on tourism, retirement, and an outsized financial sector. Since Cyprus had been a British crown colony, its legal system resembles that of Britain, which still maintains significant military bases on the island, involving approximately 3,500 serving members.

Cyprus is in a bit of a box, because it really needs to leave the Eurozone and default on its obligations, and issue a currency of its own at a devaluation to the euro. But how would they recapitalize their banks, and what would the basis be for any reasonable valuation on this new currency?

If Cyprus owned gold reserves, or even forex reserves of some stable currency, they could make this the basis of their currency, while imposing capital controls. They could liquidate, nationalize if you will, the banks, and keep the depositors whole. Although the conversion to the new Cyprus currency would be a haircut of sorts, and likely impair their banking haven status.

Iceland was able to do something like this, and so was Russia for that matter, when they defaulted, devalued, and reissued the rouble back in the 1990's.

What would the Eurozone say if Cyprus forged a deal with Russia and provided them with military bases similar to the Sovereign Base Areas, currently occupied by the British, in return for a Russian bailout? Russia is a key debtholder and a major stakeholder in Cyprus. Their interests and presence must be dealt with, and carefully.

The question of Cyprus is important, not because it is a large and significant portion of the Eurozone economy. It is most certainly not, being much less than one percent of the total.

Rather, Cyprus is showing the fatal flaws in the conception of the Eurozone, and their single currency without real fiscal union, transfer payments, a common system of taxation, and a banker of last resort.

And it has also demonstrated the weakness of the guarantees by the bureaucrats, not only in Europe but elsewhere, when it comes to money. 

This is a lesson that every central banker around the world should keep in mind.  And the bureaucrats should remember that there is a step beyond which they may go, which will shatter the confidence of the people.  And once that confidence is broken, it is very hard to recover it.

There is one lesson I hope that the people of the world take away from this.  And that is to remember that a single currency is not possible without a complete union of monetary policy, and therefore a fiscal and political union that is complete and comprehensive.  Otherwise a powerful group will wield monetary policy for their own benefit, and the rest of the currency area be damned.

When the single world currency proponents come around again with their proposals, what they are really proposing is a one world government to be established in the ensuing crisis which their actions will eventually provoke.

And despite the consistent capping of the precious metal markets, it demonstrates that there is only one money of last resort, that provides for no counterparty risk.  And that is gold.  And to a lesser extent the reserve currency of the world, which for now is the dollar. 

It is confidence that sustains the integrity of a system based on counterparty risk,  and it is that confidence that supports modern money.  And where confidence declines, force is required.  And where both force and faith fail, a break in confidence happens, and hyperinflation ensues. Hyperinflation is not simply a very high level of inflation.

A hyperinflation is a break in confidence, a monetary panic.

And in what is certainly a bit of historic irony, the German people are once again flirting with bank failures and a hyperinflation.  But in this case it is because they, in their righteous indignation, are imposing the same kind of collective punishment, in terms and conditions of economic austerity and privation on others, that were imposed on them in post war reparation.  Oh the irony, indeed.

Spring is in the air.  Plus ça change, plus c'est la même chose.

Related: New Zealand Adopts 'Cyprus style' Levies to Protect Their Banks From Insolvency

SP 500 Futures - 'Tax On Deposits' Triggers Tremors in La La Land

"News of the tax triggered a run on cashpoints in Cyprus over the weekend. Monday is a bank holiday and measures need to be approved before banks reopen on Tuesday.

Cypriot President Nicos Anastasiades, a conservative elected just three weeks ago, said the tax on deposits was an alternative to a disorderly bankruptcy.

In a televised address, he said it was painful but "will eventually stabilize the economy and lead it to recovery."

Savers who lost money would be compensated by shares in commercial banks, with equity returns guaranteed by future revenues expected from natural gas discoveries, Anastasiades said.

Reuters, Cyprus Works On Tax Levy Deal To Get Bailout Approved

The futures are down 16+ points this evening, most likely on jitters over bank instability in the eurozone.

According to one of my friends, Dennis Gartman sent out the following:

"By now I suspect that most of you have heard the news from Cyrpus over the weekend, but just in case you’ve not the Cypriot government has chosen to confiscate money from any and all accounts at any and all banks in Cyprus to pay for its banking problems...

This is astounding, and the decision was… if not fully decided in Brussels… was approved by Brussels and Berlin and Paris et al. This is unlike anything I’ve heard in my 40+ years of being in the market. This is HUGE news; this is massively bearish news for the EUR; this is massively bullish news for gold and this is THE MOST IMPORTANT BUSINESS NEWS OF THE YEAR THUS FAR. Please believe me on this; this is Europe’s “Lehman” moment.

I shall be around all day tomorrow trying to figure out what has happened here and why, but if the EUR… which closed on Friday at 1.307… does not open below 1.2900 and then continue lower, and if gold, which closed on Friday at $1590/oz does not open above $1625 and head higher I will be truly, truly stunned."

Be prepared; Monday is going to be violent"

I had a couple of email messages after a post about the sacredness of trust in money and banking earlier today.  They implied that I had a misplaced sympathy for the crooked Russians, and the little people of Cyprus.

That post was not intended to be a moral message, although morality is certainly involved.  It is more of a practical matter. 

When your money system is based on trust, it is critically important to maintain appearances.  Simply reaching out and confiscating the insured savings of depositors is very bad form, especially when everyone knows you are doing it to support a rigged system that is run for the benefit of a fortunate few.

The sophisticates are fairly used to discussing the darker corners of injustice of the system in their own circles.  And they have become comfortable with it, as they are in viewing the victims of their greed as 'takers.'  I am sure that this played some part in the expedient decision to support the Eurocrony corporatist zone by simply stealing depositors' money, and deriding them as either crooks or hapless fools who 'must contribute.' 

 But what the cynical plutocrats do not realize is that most people still believe in the system, in rules and justice.  And it is this belief that sustains a system based on promises and guarantees and trust.

I am fairly certain that the financiers and central bankers will wish to shut down any incipient panic in the Euro banks. After all, the entire global reserve currency system is a confidence game.

Buying the SP futures and selling more paper gold and silver might do the trick.  And their talking heads will carry the message that this is much ado about nothing, and merely another buying opportunity.

They certainly have dipped into that bag of tricks many, many times in the recent past.  And personally I will be stunned if they do not make a determined effort to do it again.

PBS Frontline: The Untouchables

I can hardly wait for the specials about the silver market when that time comes.

The corruption will continue until the people of the Western world hold their politicians accountable, and are not so easily distracted by The Big Show, and emotional bread and circuses.

Watch The Untouchables on PBS. See more from FRONTLINE.

Strangers Among Us: The Fatal Allure of False Premises and Unstable Systems - I Am Fishead

People tend to think other people are like them: imperfect, but generally striving to be good.  Faithful in the important things, but weak and error prone in the small.  Our self-view itself is probably a bit of a self-serving self-delusion, but that is a topic for another conversation on some other day. But it does illustrate the need for some external standard, and the rigor of self-examination against it.

As you may have heard or observed, most people tend to write their own faults in water, and carve the failings of others in large letters written in marble.

But there are strangers among us, people who are quite different from most in how they approach things. In fact, the variance amongst people is greater than most will allow in their thinking. Not all people are constructed in the same way.

There are those who are not at all self-regulating in the rational way in which we would like to think we all are.   They may be different genetically, or from the way in which they grew up in their formative years, and most often a combination of both. 

But as in so many cases,  generalizations can lead to convenient assumptions, and those can often prove dangerous.  This can cause us individual problems, as anyone who has dealt with a family member or associate who has a serious problem will know.

But the greatest source of mischief, and too often tragedy, is when we design social constructs and commercial organizations that, for the well-intentioned sake of simplicity, assume that people are rational and reliably good, except for a small and easily identifiable minority of physical criminals.

This may sound obvious enough, but in fact such mistaken assumptions can and do happen.  Certain financial and economic formulations of risk for example, are laughable in their assumptions, but nevertheless obtained widespread acceptance and recognition, before it failed miserably.  Why? For a number of reasons, most of which have to do with practical convenience of thought that gets carried too far.

 People thinking in groups tend to eschew individual common sense, relying instead on a sort of shorthand 'group think' that substitutes for experience and the hard work of individual reason.   We are both emotional and thinking beings, and have our roots in pack behaviour and tribalism. 

The 'tell' for this phenomenon is that when confronted with contrary evidence from real life, they either studiously ignore it, citing largely irrelevant counter examples from biased and carefully chosen sources, or merely brush it aside, falling back on generalizations and above all slogans. And when harsh reality inevitably intrudes, it is met with shock, stubborn resistance, and disbelief.

So, and this is the point of this essay, when thinking about social or corporate organization, bear in mind that there are a small but potentially powerfully focused set of people who will not fall into your neatly reasoned assumptions. And this fact may cause your system to be founded on sand, on a fatal flaw, that may even be promoted by those who view it to their advantage in undermining and abusing that system for their own ends.   This is why they prefer to redesign and reorganize completely instead of reform.  It provides a greater opportunity to construct new loopholes for their own benefit.

No one can make a reliable diagnosis at a distance. We tend to distort and project when observing others. And people operate from a variety of motives and intentions. But that is not the point.

The point is that systems must be designed to be, what Taleb has called, 'anti-fragile,' that is, not so reliant on certain assumed norms to be vulnerable to corruption and collapse. In system design we used to call an effective system that was even incidentally reliable at the stated extremes to be 'robust.'

I believe quite strongly that the story of our own crisis is the failure to remember the lessons from the past, that there are people whom it would be fair to call evil amongst us, an that although they may be intelligent and superficially charming, they are every bit as dangerous, and probably even more, than the killer who wields a knife or a gun. And more than anything else, we have ceased to love the truth, for the sake of winning.

“Above all, don't lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others.

And having no respect he ceases to love.”

― Fyodor Dostoyevsky, The Brothers Karamazov

And that is the descent into Hell.

Here is a brief excerpt from an essay put out by Aftermath, the group founded in part by Robert Hare to assist the victims of psychopathy. It is not intended as a diagnostic tool, because without years of specific training one is not capable of performing such a procedure reliably. But it is educative, to help us to understand that not everyone is the same, not like 'us' if such an 'us' really exists except in broad abstractions.

Below that, for your holiday viewing, I reprise the documentary film, I am Fishead.

Enjoy, and plan accordingly.

"There is a class of individuals who have been around forever and who are found in every race, culture, society and walk of life. Everybody has met these people, been deceived and manipulated by them, and forced to live with or repair the damage they have wrought.

These often charming, but always deadly, individuals have a clinical name: psychopaths. Their hallmark is a stunning lack of conscience; their game is self-gratification at the other person’s expense. Many spend time in prison, but many do not. All take far more than they give.

The most obvious expressions of psychopathy, but not the only ones, involve the flagrant violation of society’s rules. Not surprisingly, many psychopaths are criminals, but many others manage to remain out of prison, using their charm and chameleon-like coloration to cut a wide swathe through society, leaving a wake of ruined lives behind


Key Symptoms of Psychopathy

Interpersonal Emotional	Social Deviance
Glib and superficial	Impulsive
Egocentric and grandiose	Poor behavior controls
Lack of remorse or guilt	Need for excitement
Lack of empathy	Lack of responsibility
Deceitful and manipulative	Early behavior problems
Shallow emotions	Adult antisocial behavior

Glib and Superficial

Psychopaths are often voluble and verbally facile. They can be amusing and entertaining conversationalists, ready with a clever comeback, and are able to tell unlikely but convincing stories that cast themselves in a good light. They can be very effective in presenting themselves well and are often very likable and charming...

Egocentric and Grandiose

Psychopaths have a narcissistic and grossly inflated view of their own self-worth and importance, a truly astounding egocentricity and sense of entitlement, and see themselves as the center of the universe, justified in living according to their own rules...

Psychopaths often claim to have specific goals but show little appreciation regarding the qualifications required-they have no idea of how to achieve them and little or no chance of attaining these goals, given their track record and lack of sustained interest in formal education...

Lack of Remorse or Guilt

Psychopaths show a stunning lack of concern for the effects their actions have on others, no matter how devastating these might be. They may appear completely forthright about the matter, calmly stating that they have no sense of guilt, are not sorry for the ensuing pain, and that there is no reason now to be concerned...Their lack of remorse or guilt is associated with a remarkable ability to rationalize their behavior, to shrug off personal responsibility for actions that cause family, friends, and others to reel with shock and disappointment. They usually have handy excuses for their behavior, and in some cases deny that it happened at all.

Lack of Empathy

Many of the characteristics displayed by psychopaths are closely associated with a profound lack of empathy and inability to construct a mental and emotional “facsimile” of another person. They seem completely unable to “get into the skin” of others, except in a purely intellectual sense. They are completely indifferent to the rights and suffering of family and strangers alike. If they do maintain ties, it is only because they see family members as possessions...

Deceitful and Manipulative

With their powers of imagination in gear and beamed on themselves, psychopaths appear amazingly unfazed by the possibility, or even by the certainty, of being found out. When caught in a lie or challenged with the truth, they seldom appear perplexed or embarrassed-they simply change their stories or attempt to rework the facts so they appear to be consistent with the lie. The result is a series of contradictory statements and a thoroughly confused listener. And psychopaths seem proud of their ability to lie...

Shallow Emotions

Psychopaths seem to suffer a kind of emotional poverty that limits the range and depth of their feelings. At times they appear to be cold and unemotional while nevertheless being prone to dramatic, shallow, and short-lived displays of feeling. Careful observers are left with the impression they are playacting and little is going on below the surface. A psychopath in our research said that he didn’t really understand what others meant by fear.

Impulsive

Psychopaths are unlikely to spend much time weighing the pros and cons of a course of action or considering the possible consequences. “I did it because I felt like it,” is a common response. These impulsive acts often result from an aim that plays a central role in most of the psychopath’s behavior: to achieve immediate satisfaction, pleasure, or relief.

So family members, relatives, employers, and coworkers typically find themselves standing around asking themselves what happened-jobs are quit, relationships broken off, plans changed, houses ransacked, people hurt, often for what appears as little more than a whim...

Poor Behavior Controls

Besides being impulsive, psychopaths are highly reactive to perceived insults or slights. Most of us have powerful inhibitory controls over our behavior; even if we would like to respond aggressively we are usually able to “keep the lid on.” In psychopaths, these inhibitory controls are weak, and the slightest provocation is sufficient to overcome them. As a result, psychopaths are short-tempered or hotheaded and tend to respond to frustration, failure, discipline, and criticism with sudden violence, threats or verbal abuse. But their outbursts, extreme as they may be, are often short-lived, and they quickly act as if nothing out of the ordinary has happened...Although psychopaths have a “hair trigger,” their aggressive displays are “cold”; they lack the intense arousal experienced when other individuals lose their temper.

A Need for Excitement

Psychopaths have an ongoing and excessive need for excitement-they long to live in the fast lane or “on the edge,” where the action is. In many cases the action involves the breaking of rules. Many psychopaths describe “doing crime” for excitement or thrills... The flip side of this yen for excitement is an inability to tolerate routine or monotony. Psychopaths are easily bored and are not likely to engage in activities that are dull, repetitive, or require intense concentration over long periods.

Lack of Responsibility

Obligations and commitments mean nothing to psychopaths. Their good intentions-”I’ll never cheat on you again”-are promises written on the wind. Horrendous credit histories, for example, reveal the lightly taken debt, the loan shrugged off, the empty pledge to contribute to a child’s support. Their performance on the job is erratic, with frequent absences, misuse of company resources, violations of company policy, and general untrustworthiness. They do not honor formal or implied commitments to people, organizations, or principles. Psychopaths are not deterred by the possibility that their actions mean hardship or risk for others.

Early Behavior Problems

Most psychopaths begin to exhibit serious behavioral problems at an early age. These might include persistent lying, cheating, theft, arson, truancy, substance abuse, vandalism, and/or precocious sexuality. Because many children exhibit some of these behaviors at one time or another-especially children raised in violent neighborhoods or in disrupted or abusive families-it is important to emphasize that the psychopath’s history of such behaviors is more extensive and serious than most, even when compared with that of siblings and friends raised in similar settings...

Adult Antisocial Behavior

Psychopaths see the rules and expectations of society as inconvenient and unreasonable impediments to their own behavioral expression. They make their own rules, both as children and as adults. Many of the antisocial acts of psychopaths lead to criminal charges and convictions. Even within the criminal population, psychopaths stand out, largely because the antisocial and illegal activities of psychopaths are more varied and frequent than are those of other criminals. Psychopaths tend to have no particular affinity, or “specialty,” for one particular type of crime but tend to try everything. But not all psychopaths end up in jail. Many of the things they do escape detection or prosecution, or are on “the shady side of the law.” For them, antisocial behavior may consist of phony stock promotions, questionable business practices, spouse or child abuse, and so forth. Many others do things that, though not necessarily illegal, are nevertheless unethical, immoral, or harmful to others: philandering or cheating on a spouse to name a few..."

The Charming Psychopath: How to Spot Social Predators Before They Attack

Joe Stiglitz On the Price of Widening Inequality - The Tsar Nicholas II Syndrome

"Is there a greater tragedy imaginable than that, in our endeavour consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?"

Friedrich Hayek

I don't know if I would call that a great tragedy, or a greater irony. It most likely depends on the spirit with which one undertakes that endeavour to shape the future, rather than the words that express the ideals. Words turn into mere slogans, and people are often fooled, but God will not be mocked.

I like to think of the tendency of people to destroy themselves through excess as the 'Tsar Nicholas II Syndrome,' the drive to continue to hold and expand your grasp on unsustainable wealth and power for its own sake, even as it leads you and your family to a cruel death in a cellar, but with jewels sewn into the children's clothes. Winning.

It is the very basis of tragedy. Those traits and circumstances that make a person successful, and raise them to great heights, when taken to an excess that causes them to lose the sight of true value and balance, hamartia, becomes the very instrument of their own destruction.

I think Joe Stiglitz is attempting to put this in economic terms, to show the impracticality of the continuing deterioration of the American social fabric through public and tax policies with their roots in the 1980s.

Simon Johnson has recently written something similar from a slightly different perspective: Jamie Dimon and the Fall of Nations.

This long developing imbalance and erosion of equitable economic justice has led to a chasm of wealth and power, a distortion of the political system, and dangerously unstable social conditions in the developed world more usually seen in the Third World.

And this is a recipe for disaster.  But even so, the monied interests may again make the offer that they think cannot be refused: 'Do as we say, or everything burns.'

I don't think the arguments of Stiglitz and Johnson will be successful in their appeal to reason, but I hope for it. At least the effort is being made in the States. When I watch the televised news I see people utterly possessed by insatiable greed and madness, who will say and do anything to get what they want.  The current crop of political leaders throughout the Western world is a freak show. Europe and the UK may be a lost cause already, ready to heave themselves into the abyss with a spasm of despair.

One cannot reason someone back to rationality when they have been taken to a mad place through an excess of unrestrained desires.

And madness breeds madness, and will serve none but itself.

Vanity Fair
The One Percent's Problem
By Joseph Stiglitz

Let’s start by laying down the baseline premise: inequality in America has been widening for dec­ades. We’re all aware of the fact.

Yes, there are some on the right who deny this reality, but serious analysts across the political spectrum take it for granted. I won’t run through all the evidence here, except to say that the gap between the 1 percent and the 99 percent is vast when looked at in terms of annual income, and even vaster when looked at in terms of wealth—that is, in terms of accumulated capital and other assets.

Consider the Walton family: the six heirs to the Walmart empire possess a combined wealth of some $90 billion, which is equivalent to the wealth of the entire bottom 30 percent of U.S. society. (Many at the bottom have zero or negative net worth, especially after the housing debacle.) Warren Buffett put the matter correctly when he said, “There’s been class warfare going on for the last 20 years and my class has won.”

So, no: there’s little debate over the basic fact of widening inequality. The debate is over its meaning. From the right, you sometimes hear the argument made that inequality is basically a good thing: as the rich increasingly benefit, so does everyone else. This argument is false: while the rich have been growing richer, most Americans (and not just those at the bottom) have been unable to maintain their standard of living, let alone to keep pace. A typical full-time male worker receives the same income today he did a third of a century ago.

From the left, meanwhile, the widening inequality often elicits an appeal for simple justice: why should so few have so much when so many have so little? It’s not hard to see why, in a market-driven age where justice itself is a commodity to be bought and sold, some would dismiss that argument as the stuff of pious sentiment.

Put sentiment aside. There are good reasons why plutocrats should care about inequality anyway—even if they’re thinking only about themselves. The rich do not exist in a vacuum. They need a functioning society around them to sustain their position. Widely unequal societies do not function efficiently and their economies are neither stable nor sustainable. The evidence from history and from around the modern world is unequivocal: there comes a point when inequality spirals into economic dysfunction for the whole society, and when it does, even the rich pay a steep price.

Let me run through a few reasons why...

Read the rest here.

No Justice: SEC Probes Lehman For Three Years, Recommends Nothing

Corruptio optimi pessima.
(The best things when corrupted become the worst.)

Aristotle, Nicomachean Ethics

Not even a wristslap.

Well at least the SEC released its report. The craven curs and hypocrites at the CFTC have been studying the criminal manipulation of the silver market for more than four years, and as of yet have not even had the decency to release their findings, and then proclaim they will do nothing about it.

It is the contempt of vultures. The more you take it, the bolder they become.

But not to worry, you will be able to vote for 'change' again in November.

There will be another financial crisis. And there will be another bailout. And you will take it and do nothing, except perhaps grumble quietly and draw comfort with the thought, 'Thank God, at least we are not socialist like Europe.' Before it is over they may do monstrous things in your name, and you will avert your eyes and say nothing.

"For what does it profit a man, if he shall gain the whole world, but lose his soul?"

There is little downside to white collar crime, and accounting fraud has been effectively decriminalized in the acceptance of Lehman's 'Repo 105.'

Nothing is safe.

Deep Capture the Movie.

Bloomberg
SEC Staff Said to End Lehman Probe Without Seeking Action
By Joshua Gallu
May 24, 2012

U.S. Securities and Exchange Commission investigators have concluded their probe of possible financial fraud at Lehman Brothers Holdings Inc. and determined that they will probably not recommend any enforcement action against the firm or its former executives, according to an excerpt of an internal agency memo.

The agency has been grappling with the case for more than three years amid questions from lawmakers and investors as to whether Lehman misrepresented its financial health before filing the biggest bankruptcy in U.S. history in September 2008.

Under a heading reading “Activity in Last Four Weeks,” the undated document reads, “The staff has concluded its investigation and determined that charges will likely not be recommended.”

SEC officials didn’t dispute the authenticity of the memo or its contents.

Pressure on the agency to punish any wrongdoing related to Lehman’s collapse escalated after Anton Valukas, the court- appointed bankruptcy examiner, found the firm misled investors with “accounting gimmicks” that disguised the firm’s leverage.

Senior officials have been reluctant to formally close the matter even though investigators found a lack of evidence of wrongdoing, according to people with direct knowledge of the matter. The officials have weighed issuing a public report on their findings that would stop short of an enforcement action while describing questionable conduct...

Read the rest here.

A House Divided: A Synopsis of Bernanke's Speech at Jackson Hole, and What It Means

When listening to a speech like this, one has to remember who is speaking and under what conditions. A Fed Chairman has a thousand watt megaphone attached to his chest, and so he must speak quietly and calmly, in order not to disrupt markets and place the Fed in the middle of political controversies. Unless you have actually been close to or in a position of power, where your words carry great significance, it is all too easy to forget this.

Bernanke addressed his problem with the dysfunctional Congress, gridlocked by luddites and libertines, and the serpentine leadership style of Obama.  He is trying to stand his monetary policy on a two legged stool, and it is not working.  The all important fiscal side of economic governance is broken.  Not so much that it is doing the wrong things.  Rather, the process itself is broken, hopelessly frozen by ideological warfare and implacable extremes.

He reiterated that the Fed has the additional policy tools to deal with the situation, in addition to the unprecedented actions they have taken already, although there is a lack of consensus on his own Fed. It is significant that they have expanded their September meeting from one to two days in order to discuss this more fully.

Bernanke gave a particularly sharp rebuke to the Congress, at least by Fed Chairman standards, for the debt ceiling deadlock and discussions that recently shook confidence in the markets.

There is little doubt in my mind that the Fed will put some additional scalable programs in place before the end of the year. The introduction of new programs during a Presidential election year is typically considered to be only acceptable at extreme risks to the banking system and obvious duress to the economy.

As a reminder, there will be another Non-Farm Payrolls number out next week.

There are forces in the US that are on the offensive, and pushing for a crisis in order to better obtain their objectives. What Bernanke is doing is positioning the Fed on the sidelines as best he can, while signaling that they will act once again, overtly or quietly, to prevent a major financial breakdown.

But he is stressing that the Fed has done quite a bit already, and they cannot do it alone. The monetary actions are ineffective without a fiscal counterpart. Like most observers, the Fed sees a broken governance process, and the new super-committee is likely destined to fail in more gridlock. The Fed will not act again except under the duress of an approaching crisis, although they will have the programs in place in anticipation of that crisis.

The US is a house divided against itself. Until the system of governance is repaired, the Fed cannot be reasonably expected to take up the burden of the nation's problems on its own.

So for the future, listen to what the Fed says, but more importantly, watch what the Fed does. And some of that may be opaque, at least for the time being.

This is not necessarily what I think, or what I would do if, God forbid, I was the Fed Chairman. This is what Bernanke is thinking in his own words, and what I believe he is doing, and to some extent, why he is doing it.

Fri Aug 26, 2011 10:00am EDT

JACKSON HOLE, Wyoming, Aug 26 (Reuters) - The following are highlights of Federal Reserve Chairman Ben Bernanke's speech on Friday to a central bank conference sponsored by the Kansas City Federal Reserve Bank.

On economic growth, inflation outlook:

"The recent data have indicated that economic growth during the first half of this year was considerably slower than the Federal Open Market Committee had been expecting, and that temporary factors can account for only a portion of the economic weakness that we have observed.   Consequently, although we expect a moderate recovery to continue and indeed to strengthen over time, the Committee has marked down its outlook for the likely pace of growth over coming quarters.

"With commodity prices and other import prices moderating and with longer-term inflation expectations remaining stable, we expect inflation to settle, over coming quarters, at levels at or below the rate of 2 percent, or a bit less, that most Committee participants view as being consistent with our dual mandate."

On what the Fed's recent policy decision means:

"We indicated that economic conditions -- including low rates of resource utilization and a subdued outlook for inflation over the medium run -- are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. That is, in what the Committee judges to be the most likely scenarios for resource utilization and inflation in the medium term, the target for the federal funds rate would be held at its current low levels for at least two more years."

On what other tools the Fed has:

"In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion. The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability."

On market volatility:

"Financial stress has been and continues to be a significant drag on the recovery, both here and abroad. Bouts of sharp volatility and risk aversion in markets have recently reemerged in reaction to concerns about both European sovereign debts and developments related to the U.S. fiscal situation, including the recent downgrade of the U.S. long-term credit rating by one of the major rating agencies and the controversy concerning the raising of the U.S. federal debt ceiling. It is difficult to judge by how much these developments have affected economic activity thus far, but there seems little doubt that they have hurt household and business confidence and that they pose ongoing risks to growth. The Federal Reserve continues to monitor developments in financial markets and institutions closely and is in frequent contact with policymakers in Europe and elsewhere."

On long-term economic growth prospects:

"It may take some time, but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals ... Notwithstanding the severe difficulties we currently face, I do not expect the long-run growth potential of the U.S. economy to be materially affected by the crisis and the recession if -- and I stress if -- our country takes the necessary steps to secure that outcome."

On the impact of monetary and fiscal policy:

"Normally, monetary or fiscal policies aimed primarily at promoting a faster pace of economic recovery in the near term would not be expected to significantly affect the longer-term performance of the economy. However, current circumstances may be an exception to that standard view ... The quality of economic policymaking in the United States will heavily influence the nation's longer-term prospects. To allow the economy to grow at its full potential, policymakers must work to promote macroeconomic and financial stability; adopt effective tax, trade, and regulatory policies; foster the development of a skilled workforce; encourage productive investment, both private and public; and provide appropriate support for research and development and for the adoption of new technologies."