Putting Global Debt Into Perspective – 13 Stunning Silver Stats

Although gold has a bigger reputation today as a monetary metal, it was often deemed too valuable for everyday transactions throughout history.

But, as Visual Capitalist's Jeff Desjardins notes, for the most part, common people in places like Ancient Rome used silver to buy daily staples like grain or wine. As a result, silver has a strong reputation through monetary history as the “people’s money”.

Even today, silver is still much more widely accessible. With one ounce of gold being 70x more expensive than an ounce of silver, it’s difficult for someone who is just starting to accumulate wealth to own gold.

Visualizing Silver

What do savings and debt look like, using the “people’s money”?

Below is everything from the average paycheck to global sovereign debt visualized as silver cubes.

1. A median U.S. family brings in $2,355 per pay period (semi-monthly) pre-tax.

Average U.S. Paycheck as a Silver Cube

2. However, the median American family only has about $5,000 of savings.

Median U.S. Savings as a Silver Cube

3. The standard silver delivery bar holds 1,000 oz of silver.

Silver bar

4. Average household debt is $98,312, with mortgage debt being the primary component.

Average household debt as a silver cube

5. A Lamborghini worth over $400,000 needs a silver cube with 16-inch (0.4m) sides.

A Lamborghini's value as a silver cube

6. Using a silver price of about $18/oz, here’s what $1 million looks like.

$1 million as a silver cube

7. Every day, the world’s mines produce about 75 tonnes of silver, worth over $44 million.

Daily Silver Production as a silver cube

8. Silver Eagle sales have jumped considerably since the Financial Crisis.

Silver Eagle Sales as a Silver Cube

9. When the Hunt Brothers tried to corner the silver market, they hoarded 200 million oz.

Hunt Brothers Stockpile as a Silver Cube

10. Today, almost 900 million oz of silver is mined each year.

All Silver Mined Each Year as a Silver Cube

11. JP Morgan’s market capitalization, in comparison to previous cubes.

JPMorgan's market capitalization as a silver cube

12. All silver ever mined would not compare to the Fed’s balance sheet, which is now $4.5 trillion.

All Global Debt Visualized as a Gold Cube

13. Global sovereign debt is 13X bigger than all previous cubes combined.

All Sovereign Debt Visualized as a Gold Cube

Liked our visualizations of silver cubes?

Don’t forget to check out 11 stunning visualizations of gold.

The “World’s Most Bearish Hedge Fund” Capitulates After Surge In Redemptions

“At some point in my life, and I can’t remember exactly when, I learnt two things that define my approach on how to deal with problems. The first is simply to tell the truth, while it may be unpleasant, at least it is then out in the open and you can begin to work towards a solution. The second is that if something is unavoidable, then just accept the fact it will happen and deal with it.”

       –  Russell Clark, CIO of Horseman Global

At the end of 2016, we reported that having successfully avoided a calamity for most of 2016 despite being massively net short, somewhere to the tune of around -90%, at times rising as high as -105%, Horseman Global, finally had a bad month. In fact, losing -12.80% in November the hedge fund which we previously dubbed “the world’s most bearish hedge fund” due to its staggering net bearish bias, had just suffered its worst month in history as “the short book, the bond book and the forex book lost money.” We also wondered if Horseman would also have it worst year ever, outpacing the -24.7% return in 2009.  The answer was no, but just barely. After a 7.81% drop in December, Horseman Global has closed the books on 2016 with a 24.03% net loss, its second worst in history.

Unfortunately, 2017 did not start well for Horseman Global’s CIO Russell Clark; in fact, while two months ago we noted that the fund had started to close parts of its short book and was actively reducing “gross” exposure (perhaps Clark here meant net), it was “still long bonds and short equities.” As a result, as the next table shows, Horseman has started off the year with the worst two-month stint on record, losing 6.55% YTD. Never before in its history has the famously bearish hedge fund had such a dour start to a calendar year.

Just as importantly, as previewed two months ago, as part of the fund’s net exposure drop, what was as recently as December a net -100% short, has since collapsed to only -12%, effectively a neutral , following a short covering rampage by Clark.

At the start of the year, Clark told his LPs that after losing 24% in 2016 on what ultimately ended up being a failed bearish bet, he would start covering his net short:

Despite what I think, we are beginning to close parts of our short book. We have largely exited airline related shorts. We have also closed staple shorts, as they were largely there to protect against a fall in yields, which they did to a degree. We have also closed many developed financial shorts to make some space for Chinese financial shorts. We have also reduced the bond position and moved much of in to German bunds. The majority of the bund position is in 5 year bunds, the buy case I made a few months ago.

In retrospect that Bund long may not have been the best bet, and the LPs appear to agree. The result: a redemption spike amounting to 10% of AUMs.

Currently we have redemption requests for about 10% of AUM. Changing strategies means saying goodbye to old investors who bought into the old strategy, and welcoming new investors who buy into the new strategy. That’s just the nature of the way I manage money, where once I change my mind I move quickly to where I want to be. The upshot is that we are reopening the fund to new investors April 1.

This in turn forced even more liquidations in the Horseman Fund, and prompted the CIO to change his startegy from an outright bearish, to a far more netural – and outright bullish on Emerging markets – one, a move some may say could have top-ticked the market.  How did Clark explain away his 2016 error, and the shift in strategy? To his credit, quite directly:

The truth is that in 2016, I was finding many short themes in developed markets, while not seeing any resolution in China. To square these observations up, I had assumed we would get some sort of financial crisis in China, which would take down all markets. However, in the end it looks like China has managed to enact capacity cuts that have reduced the risk of a major financial crisis.

 

What I find interesting, is that US markets have moved up on the promise of reform, even though they look fully valued in my view. China and India we have already had reform take place, and the stocks are not priced for these benefits. Plainly the choice is obvious for me. Long emerging markets, short developed markets is the strategy for the fund.

Finally, for those who are leaving their funds with the hedge funds in hopes that Clark will turn things around in 2017, here are his parting words:

While the drawdown is disappointing, what I find really exciting about markets, is that I am going long assets that used to own all the way back in 2007. These assets have been in close to a ten-year bear market. Typically, they have fallen 90% or more over that time, and have become forgotten by the market. They also incredibly cheap. Even more exciting is that all the other fund managers that used to own these assets back in 2007 and were my competitors, have essentially left the industry. This is a typical result in the fund management industry where most managers are unwilling to short sell. Most people only know Russell Clark the short seller, but some older investors still remember Russell Clark emerging market bull of 2006/7. And now we have a synthesis. We are now long emerging markets and short developed markets.

* * *

Below is the full letter

You fund lost 3.23% net this month. Losses came from the short book and the currency book.

 

At some point in my life, and I can’t remember exactly when, I learnt two things that define my approach on how to deal with problems. The first is simply to tell the truth, while it may be unpleasant, at least it is then out in the open and you can begin to work towards a solution. The second is that if something is unavoidable, then just accept the fact it will happen and deal with it.

 

The truth is that in 2016, I was finding many short themes in developed markets, while not seeing any resolution in China. To square these observations up, I had assumed we would get some sort of financial crisis in China, which would take down all markets. However, in the end it looks like China has managed to enact capacity cuts that have reduced the risk of a major financial crisis.

 

In India, we have had three huge reforms over the last few years. Digital ID system, the reform of the tax system, and now demonetisation. These reforms will make doing business far easier in India. The nexus of a China cutting commodity production, and an India with a strong growth outlook, is to be bullish commodities, and this is where most the long book is now focused. The flip side of this is that higher commodity prices will impact spending and margins for western consumers. So we have spent the last two months, expunging bearish positions on EM and replacing them with long positions. At the same time we have been adding developed markets shorts.

 

What I find interesting, is that US markets have moved up on the promise of reform, even though they look fully valued in my view. China and India we have already had reform take place, and the stocks are not priced for these benefits. Plainly the choice is obvious for me. Long emerging markets, short developed markets is the strategy for the fund.

 

The second thing about changing strategy is that there are various unavoidable things that will happen, about which much there is little we can do. First, with a change of strategy, there will be people that will wish to redeem. Currently we have redemption requests for about 10% of AUM. Changing strategies means saying goodbye to old investors who bought into the old strategy, and welcoming new investors who buy into the new strategy. That’s just the nature of the way I manage money, where once I change my mind I move quickly to where I want to be. The upshot is that we are reopening the fund to new investors April 1.

 

The other negative with changing strategies, which is why I don’t do it very often, is that it costs money to do, somewhere between two to three percent. This is a rule of thumb, and comes from recently closed shorts falling after you close, and recently purchased stocks tending to have a give back after being bought. It also because it normally takes a while to get the balance between different parts of the portfolio right. I have tried different ways in the past to minimise this, but the outcome is always the same. This cost of changing is a large part of the performance this month.

 

While the drawdown is disappointing, what I find really exciting about markets, is that I am going long assets that used to own all the way back in 2007. These assets have been in close to a ten-year bear market. Typically, they have fallen 90% or more over that time, and have become forgotten by the market. They also incredibly cheap. Even more exciting is that all the other fund managers that used to own these assets back in 2007 and were my competitors, have essentially left the industry. This is a typical result in the fund management industry where most managers are unwilling to short sell. Most people only know Russell Clark the short seller, but some older investors still remember Russell Clark emerging market bull of 2006/7. And now we have a synthesis. We are now long emerging markets and short developed markets.

European Parliament Censors Its Own Free Speech

Authored by Judith Bergmann via The Gatestone Institute,

  • The rule strikes at the very center of free speech, namely that of elected politicians, which the European Court of Human Rights has deemed in its practice to be specially protected. Members of the European Parliament are people who have been elected to make the voices of their constituents heard inside the institutions of the European Union.

  • The rule can only have a chilling effect on free speech in the European Parliament, and will likely prove a convenient tool in trying to shut up those parliamentarians who do not follow the politically correct narrative of the EU.

  • By lifting Le Pen's immunity while she is running for president of France, the European Parliament is sending the clear signal that publicizing the graphic and horrifying truth of the crimes of ISIS, rather than being received as a warning about what might soon be coming to Europe, instead ought to be punished.

  • Where does this clearly totalitarian impulse stop and who will stop it?

The European Parliament has introduced a new procedural rule, which allows for the chair of a debate to interrupt the live broadcasting of a speaking MEP "in the case of defamatory, racist or xenophobic language or behavior by a Member". Furthermore, the President of the European Parliament may even "decide to delete from the audiovisual record of the proceedings those parts of a speech by a Member that contain defamatory, racist or xenophobic language".

No one, however, has bothered to define what constitutes "defamatory, racist or xenophobic language or behavior". This omission means that the chair of any debate in the European Parliament is free to decide, without any guidelines or objective criteria, whether the statements of MEPs are "defamatory, racist or xenophobic". The penalty for offenders can apparently reach up to around 9,000 euros.

"There have been a growing number of cases of politicians saying things that are beyond the pale of normal parliamentary discussion and debate," said British EU parliamentarian Richard Corbett, who has defended the new rule. Mr. Corbett, however, does not specify what he considers "beyond the pale".

In June 2016, Mahmoud Abbas, president of the Palestinian Authority, addressed the European Parliament in a speech, which drew on old anti-Semitic blood libels, such as falsely accusing Israeli rabbis of calling on the Israeli government to poison the water used by Palestinian Arabs. Such a clearly incendiary and anti-Semitic speech was not only allowed in parliament by the sensitive and "anti-racist" parliamentarians; it received a standing ovation. Evidently, wild anti-Semitic blood libels pronounced by Arabs do not constitute "things that are beyond the pale of normal parliamentary discussion and debate".

Palestinian Authority President Mahmoud Abbas receives a standing ovation at the European Parliament in Brussels on June 23, 2016, after falsely claiming in his speech that Israeli rabbis were calling to poison Palestinian water. Abbas later recanted and admitted that his claim had been false. (Image source: European Parliament)

The European Parliament apparently did not even bother to publicize their new procedural rule; it was only made public by Spain's La Vanguardia newspaper. Voters were, it appears, not supposed to know that they may be cut off from listening to the live broadcasts of the parliamentarians they elected to represent them in the EU, if some chairman of a debate subjectively happened to decide that what was being said was "racist, defamatory or xenophobic".

The European Parliament is the only popularly elected institution in the EU. Helmut Scholz, from Germany's left-wing Die Linke party, said that EU lawmakers must be able to express their views about how Europe should work: "You can't limit or deny this right". Well, they can express it (but for how long?), except that now no one outside of parliament will hear it.

The rule strikes at the very center of free speech, namely that of elected politicians, which the European Court of Human Rights has deemed in its practice to be specially protected. Members of the European Parliament are people who have been elected to make the voices of their constituents heard inside the institutions of the European Union. Limiting their freedom of speech is undemocratic, worrisome and spookily Orwellian.

The rule can only have a chilling effect on freedom of speech in the European Parliament and will likely prove a convenient tool in trying to shut up those parliamentarians who do not follow the politically correct narrative of the EU.

The European Parliament lately seems to be waging war against free speech. At the beginning of March, the body lifted the parliamentary immunity of French presidential candidate Marine Le Pen. Her crime? Tweeting three images of ISIS executions in 2015. In France, "publishing violent images" constitutes a criminal offense, which can carry a penalty of three years in prison and a fine of 75,000 euros. By lifting her immunity at the same time that she is running for president of France, the European Parliament is sending the clear signal that publicizing the graphic and horrifying truth of the crimes of ISIS, rather than being received as a warning about what might soon be coming to Europe, instead ought to be punished.

This is a bizarre signal to be sending, especially to the Christian and Yazidi victims of ISIS, who are still largely ignored by the European Union. European parliamentarians, evidently, are too sensitive to deal with the graphic murders of defenseless people in the Middle East, and are more concerned with ensuring the prosecution of the messengers, such as Marine Le Pen.

So, political correctness, now effectively the "religious police" of political discourse, has not only taken over the media and academia; elected MEPs are now also supposed to toe the politically correct line, or literally be cut off. No one stopped the European Parliament from passing this undemocratic anti-free speech rule. Why did no parliamentarian out of the 751 MEPs raise red flags about the issue before it became an actual rule? Even more importantly: Where does this clearly totalitarian impulse stop and who will stop it?

Trade war: is it time to collect canned food and build a bunker? | Greg Jericho

If we don’t ensure free trade benefits are distributed equally, the world could get dangerous very quickly

It’s not often you go to a conference on agriculture and come away feeling quite scared for the future. But this week’s Abare’s 2017 Outlook conference featured a talk on the future of trade that painted a dire picture of trade barriers and nations moving into blocks that engage in trade wars and perhaps more violent conflicts. It was a stark warning to those who value the benefits of trade of the need to also value the concerns of those who miss out on those benefits.

In a conference featuring the usual talks on innovation in agriculture and pest management, the Abare conference also featured a speech by Rabobank economist, Michael Every that had me – and most in the audience – wondering if it was time to start collecting canned food and building a bunker.

Related: Trump could end global trade and force choice between US and China, says economist

Related: Top bosses question benefits of globalisation, PwC survey finds

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