2,500 Years Of Financial Crises :"Augustus Was The First Keynesian"

"Augustus was the original Keynesian..." is how Bob Swarup, author of ‘Money Mania’, begins to explainto John Authers the constant threads of similarity between financial crises dating back to the 4th century BC; and why, it seems, we are entirely incapable of learning our lessons from them. Crucially, innovation and crises are related; and both have their roots in growing complexity, interaction and in human nature. Of course, as we noted recently, not one of our current slew of 'great thinkers' believes we will have another economic contraction, let alone another crisis...

The Scarlet Absence Of A Letter Of Credit

If there’s one thing we all know about banks and bankers: they love to tell tales in public of how much they value their customers. However, what you’ll never hear them profess in private: is how much they trust them. Although one may think that’s unseemly, believe it or not there is another entity banks hold at an even lower tier. Other banks.  One of the known facts people remember about the melt down in 2008 (as opposed to general public) was when the banks no longer trusted each other, and what they earlier claimed was “collateral” wasn’t actually worth what it was stated to be. As we recently explained in How China’s Commodity-Financing Bubble Becomes Globally Contagious, the implications of this development and the consequences it portends just might make it the proverbial “canary in a coal mine.” The underlying issue that makes this far more dangerous or different from times past is three-fold...

Tit For Tat: Ukraine Blocks Crimea Water Supply With Russia Set To Halt Ukraine Gas

Moments ago, Russia casually hinted that Ukraine should use part of the IMF aid (which has been promised in virtually all increments between $1 billion up to $18 billion, but at last check not one penny has been wired) to repay Gazprom's debt, which is anywhere between the $2.2 billion Gazprom has said Ukraine is delinquent on for 2014 gas supplies, and an additional $11.4 billion which is what Gazprom said Ukraine's state-owned energy firm Naftogaz owes for unused take-or-pay arrangements in 2013. This happened just hours after Ukraine reportedly used the 'nuclear option' and halted the bulk of water supply to Russia's newest territory: Crimea.  Tit for tat?

Say Goodbye To "Net Neutrality" – New FCC Proposal Will Permit Discrimination Of Web Content

The concept of “net neutrality” is not an easy one to wrap your head around. Particularly if you aren’t an expert in how the internet works and if you don’t work for an ISP (internet service provider). In fact, we think that lobbyists and special interest groups make the concept intentionally difficult and convoluted so that the average person’s eyes glaze over and they move on to the next topic. We are by no means an expert in this area; however, in this post we will try to explain in as simple terms as possible what “net neutrality” means and what is at risk with the latest FCC proposal. We also highlight a wide variety of articles on the subject, so we hope this post can serve as a one-stop-shop on the issue. In a nutshell, the latest rules from the FCC is truly the American way of censorship

"Blame The Weather" - For These CEOs, There Is Nothing Worse Than Snow In The Winter

Since stupidity rapidly goes mainstream, the same excuse used to "explain" away housing and economic deterioration was instantly (ab)used by a barrage of public company CEOs, whose earnings results were disappointing for only one reason (in their minds) - the weather. Because one always needs a narrative - any narrative - to explain away stories such as this: "Q1 Earnings Season Summary: More Than Half Have Missed Revenues"...

OSCE Sends Second Team To Negotiate Release Of First OSCE Team Held Hostage In East Ukraine

It is becoming abundantly clear that any further attempts by the west (and Russia which ironically is a member of the OSCE) to inject third parties in what is a clear conflict between Russia and Ukraine, will be met with failure. Which is why we read with amusement that in the latest attempt to de-escalate violence, now that diplomacy has failed, the OSCE has dispatched a negotiating team to try to secure the release of the first OSCE group, a German government source said on Saturday. "A negotiating team from the OSCE is on the way to the region," said the source, declining to give further details, including exactly where they were heading.

Hillary Clinton Says Snowden "Helped Terrorists"

Defending the nation's mass surveillance programs because "people were desperate to avoid another [9/11] attack," Hillary Clinton, speaking at University of Connecticut on Wednesday night, noted that a balance must be found to "make sure that we're not infringing on Americans' privacy, which is a valued, cherished personal belief that we have." But her most controversial comments were swved for Edward Snowden, as she though it "odd that he would flee," since, she noted, "we have all these protections for whistle-blowers, " and concluded rather cryptically that, "turning over a lot of that material... gave all kinds of information, not only to big countries, but to networks and terrorist groups and the like."

Russian "Doomsday Plane" Spotted Flying By Finland Border

The last time the Russian "Doomsday Plane" was seen in the air doing its trademark loops at 27,000 feet telegraphing Vladimir Putin was somewhere nearby, was on March 31, just days after the formerly Ukrainian region was annexed by the Kremlin. Until today, when over the past 4 hours, the Tu-214 has been quietly circling in position just shy of Finland and the Baltics, where as it is known, NATO has been depositing hundreds of western soldiers in a "defensive" build up.

The Crisis of Confidence in US Hegemony

The 21st century is still young, but it has already presented the United States with a series of internal and external challenges. History tells us that when one hegemon is in decline, international relations become more complex and uncertainties increase the risks. We may be in such a period today.

Cliven Bundy Responds To Racism Accusations

In response to the verbal attacks pitched at him over thelast few days, Cliven Bundy has held a brief press conference to explain his perspective on 'slavery' and allegations of racism. Much as the world seems 'happy' to live a life of debt serfdom, Bundy notably remarked that he wonders if any of us are better off now "as slaves to charity and government subsided homes."

Schumpeter, Intellectuals And Capitalism

Kevin Hassett recently debated Thomas Piketty on his book, "Capital in the 21st Century". After presenting some interesting points on Piketty's work, Hassett reminds his audience, somehow ironically, that not just Marx, but also Joseph Schumpeter thought that capitalism was going to die. As he wrote in his voice "Capitalism" for the Encyclopaedia Britannica, Schumpeter was convinced that "the capitalist process by its very success tends to raise the economic and political positions of groups that are hostile to it."

Sell In May?

As readers will recall from our recent preview of what equity performance this month was supposed to look like, at least based on historical data, April was supposed to be the best month of the year. Sadly for the bulls, it has been anything but. That's the good news. The bad news is that as most know the old saying "sell in May and go away", there is nothing but pain for the next six months

Grant Williams On Gold As An "Unsure-ance" Policy

The Fed has launched everyday Americans and investors into uncharted economic territory... The Fed’s money-printing policies have driven the markets straight upward, lighting up a new post-crash asset bubble. Their constant price fixing creates, prolongs, and inflates the cycle of booms and busts... and since gold is the ultimate insurance policy against that type of uncertainty, it is very likely to benefit from the Fed’s policies. What's more, consuming ever more than it produces, the US has slipped into record debt levels. The national debt has hit the astounding sum of $17.5 trillion, surpassing America’s total GDP for the first time in 2012. As Grant Williams asks (rhetorically in this brief interview): does the Fed have all of this under control? Probably not... and that is why you need an "unsure-ance" policy.


What Lumber's Impending Trend Test Means For Housing

This week saw yet another nail in the coffin of the 'hope-strewn housing-recovery escape-velocity growth engine of America' meme when new home sales collapsed. Homebuilder stocks, while volatile, have been trending lower recently (notably underperforming the S&P) as macro disappointments continue but, as Stone-McCarthy notes, it is the moves in lumber prices (the prime material used in home construction) that is of particular concern.

12 Numbers Which Prove That Americans Are Sick And Tired Of Politics As Usual

The American people are increasingly waking up to the fact that nothing ever seems to change in Washington D.C. no matter which political party is in power.  In fact, as you will see later on in this article, an all-time high 53 percent of all Americans believe that neither party "represents the American people". The mainstream media would have us believe that the Republicans and the Democrats are constantly fighting like cats and dogs, but the truth is that the Republicans want to take us to the same place that the Democrats want to take us - just a little more slowly perhaps. In the final analysis, it is hard to be optimistic about a political solution to any of our major problems in the near future.  Most of our politicians are deeply corrupt, the American people are incredibly angry and are deeply divided, and the vast majority of campaigns for federal office are won by the candidate that raises the most money.

CEO 'Post-Weather' Optimism Collapses To 5-Month Lows

Sentiment among CEOs, based on Bloomberg's excellent Orange Book index of their executive comments, had reached 14 month high levels in mid-April as everyone was optimistic about a post-weather pent-up-demand bounce in everything from car-buying to burger-flipping. As Bloomberg's Rich Yamarone notes, optimism was the most widespread in the housing, automotive and transportation industries. The last week has seen the ugly reality hit home as Sentiment collapsed at its fastest pace since the government shutdown and dropped to 5-month lows. Common pessimistic issues include: unfavorable currency exchange rates, higher-priced food and uncertainties in Russia and Ukraine.

Guest Post: When Will Capitalism Come To Wall Street?

Ralph Waldo Emerson once said “Doing well is the result of doing good. That’s what Capitalism is all about,” and nowhere is this description more embraced than on Wall Street. There, the idea of the meritocracy, where those that produce the most financial value get to take home the biggest rewards is almost a cliche  All of which begs the question, why do most hedge funds exist?  If Capitalism existed on Wall Street, and compensation was tied to the creation of economic value, most of the “absolute return industry” would go out of business. To understand why, we need to go back a decade.

Mortgage Companies Face "Tremendously Difficult" Year As Housing Recovery Crumbles

The topic of the false recovery in the US housing market has seldom been far from these pages but it seems both the mainstream media and the actual businesses on the ground are seeing that extrapolating dead-cat-bounces and easy-money bubbles (once again) ends in tears. As WSJ reports, mortgage lending declined to the lowest level in 14 years in the first quarter as homeowners pulled back sharply from refinancing and house hunters showed little appetite for new loans, the latest sign of how rising interest rates have dented the housing recovery. The decline shows how the mortgage market is experiencing its largest shift in more than a decade as an era of generally falling interest rates that began in 2000 appears to have run its course... and the marginal potential refinancer has hit their limit.

5 Things To Ponder: Smorgasbord

This week's compilation of things to ponder is a veritable smorgasbord of topics that caught our attention this past week. From "The Limits of Growth" to "Peak Profits" and "The Next Bailout", plenty to ponder this weekend.