Alasdair Macleod Warns A Currency Crisis Is Dead Ahead

Alasdair explains how his "Fiat Money Quantity" (FMQ) is derived, as well as what it can tell us about the true levels of fiat money supply. In the case of the dollar, it reveals that levels are far above what is commonly appreciated – so far, in fact, that a currency crisis could arrive sooner than even many dollar bears expect... and how horribly mispriced gold remains.

JPY Drops, Nikkei Pops On Japan's Worst Trade Deficit On Record

You have to laugh really... We presume the rally in Japanese stocks and weakness in the JPY reflects an assumption that this dismal miss for both imports and exports - leaving Japan's adjusted trade deficit the worst in Bloomberg's 20 year history - means moar Abenomics. Of course, the headlines will be all about Abe's 'any minute now' comments or Kuroda's 'just one more quarter' hope (as he speaks later today) but the reality is that things are not getting better in the radioactive nation as this marks the 30th consecutive trade deficit... but, like Venezuela, when has that even been reason not to buy stocks... S&P futures are up 2.5 points (below Friday's highs still for now), gold has given back its earlier gains and is unchanged, and Treasury Futures are down a tick.

How Europe's "Benefits" Stack Up To The US Entitlement Society

With an increasing focus in America on the ever growing entitlement society, we thought it might be useful to get some context of how the welfare states stack up across Europe. As Britain prepares to "test" immigrants in an effort to stymie "benefit tourists", The Telegraph's Ed Malnick, details what health care and child, unemployment and housing benefit a 30-year-old single EU migrant with a child but no job can access in each member state.

Caxton: Goodbye To The Self-Sustaining Recovery

"It’s clear to us now that the US economy just isn't going to reach escape velocity," said Andrew Law, head of Caxton Associates (one of the hedge fund industry’s most successful money managers) in a wide-ranging and rare interview with the Financial Times. "Tapering is off the table for the foreseeable future." As we have explained numerous times, Caxton notes the Fed has little option but to continue its policy of extraordinary monetary easing indefinitely, adding "what happened [last week] was just another can kicking exercise. The problem has not been solved and the hopes for a grand bargain are in tatters." Simply put, he concludes rather dismally, "there are no incentives for the corporate world to go out and spend right now..."

Larry Summers Explains How He Would Fix The Economy (In 80 Seconds)

A physically deflated Larry Summers spoke with Charlie Rose about the US economy ("all we need is a few tenths of a percentage more growth..."), the political process ("nobody should be proud of the governance process..."), and the state of American education ("reward merit, remove tenure..."). The following 86 seconds summarizes the twice-denied would-be-central banker's thoughts...

Guest Post: Growth Is Obsolete

The sad, stark fact is that oil is now too expensive to permit further expansion of economies and populations. Expensive oil upsets the cost structure of virtually every system we need to run modern life: transportation, commerce, food production, governance, to name a few. In particular expensive oil destroys the cost structures of banking and finance because not enough new wealth can be generated to repay previously accumulated debt, and new credit cannot be extended without a reasonable expectation that more new wealth will be generated to repay it. Through the industrial age, our money has become an increasingly abstract and complex product of debt creation. In short, a society with deeply impaired capital formation has turned to crime, corruption, fakery, and subterfuge in order to pretend that “growth” — i.e. expansion of capital — is still happening.

Mexico Overtakes US As World's Fattest Country; Begins Regulating Food Consumption

Mayor Bloomberg's crusade to micromanage what New Yorkers put in their mouth has so far failed, but that just means the attempt to impose the first "New Normal" nanny state, in which individual calorie consumption is regulated for the greater good by the even greater government, has simply shifted its geographic location. In this case to Mexico, which according to the OECD has surpassed the US as the world's fattest country and is "notorious for its love of sweets, fried foods and pastries" where as the WSJ reports, the lower House of Congress passed on Thursday a special tax on junk food that is seen as potentially the broadest of its kind, part of an ambitious Mexican government effort to contain runaway rates of obesity and diabetes.

Guest Post: Gold Fails To Obey Script

Selling both the rumor and the news turns out not to work... but we cannot yet say whether a trend change is definitely in the bag. However, considering how absolutely dismal sentiment on gold is, considering the many similarities to the 2008 'retest' that could be observed recently (back then, gold was also declared 'dead' by the mainstream) and given the fact that for a change, the gold market has not acted in the way that was widely expected, it continues to make sense to look for more signs of a trend change to emerge. Ideally declines should continue to be kept in check by support at $1275, while any rally that manages to exceed the $1350 level on a closing basis and confirmed by the gold stock indexes can probably be interpreted as a sign that the short to medium term trend has finally reversed for good.

Free Volling: As VIX Plunges, Someone Bets $6.7 Million On Prompt Rebound

While last week's relentless panic buying has been extensively commented on, it was last week's nearly 50% plunge in near-term stock vol that the major news as the world went from risk off mode to risk on. It wasn't just stocks whose volatility imploded: it was the implied near-term volatility of all asset classes that was hammered in the past three days. But while everyone is fascinated by the rapid VIX down move, it is what someone did on Friday by betting that VIX will double by February in a 24/29 VIX Call Spread, that was of note. The amount wagered: $6.7 million. Whether or not this was an outright trade, or a hedge (and if one listens to Jamie Dimon perjuring himself to Congress, any trade is a hedge, adding further to the confusion) is unknown, but it is not pocket change betting that the plunge in vol will be merely transitory.

Obamacare’s Unintended Consequences: It’s Not Just A Technology Problem

The most important question we should be asking is not the one that Stewart repeated several times while grilling Sebelius: “Businesses were given a delay of a year, but individuals were not given that option, why is that?” The bigger question is: “If the administration messed up so badly on the seemingly mundane task of building a website, how much will Obamacare damage the broader economy and the nation’s long-term fiscal health?” The Stewart-Sebelius interview drew attention to the second question only briefly, when Stewart mentioned that employers were converting full-time workers to part-time due to the ACA. But he failed to challenge Sebelius’ weak response that “economists – not the anecdotal folks – but economists say there’s absolutely no evidence that part-time work is going up.” This is exactly where an informed and unbiased interviewer would have dug further to expose the truth.

"New York Is Drowning In Bribes And Corruption"

Public corruption, based on all the evidence, appears rampant. And the ranks of those convicted in office have swelled to absolutely unacceptable levels. State Senators as well as State Assemblymen; elected officials as well as party leaders; city council members as well as town mayors; Democrats as well as Republicans.

 

- Preet Bharara, U.S. Attorney for the Southern District of New York

It’s no surprise that New York is exceedingly corrupt. It’s a huge city, with a ton of wealth and massive income inequality. That’s basically the primary breeding ground for wide-scale corruption. However, it also comes as no surprise that the situation has gotten a lot worse in recent years. After all, NYC is the headquarters of some of the largest financial institutions in the world. As such, some of the worst actors in the recent financial collapse call the city home. The whole world watched as these criminals and shysters not only evaded criminal charges, but were also rewarded trillions of dollars of public support for their efforts. The example was set. Crime pays, and now the entire city seems to be following their lead.

Bitcoin Climbs To Highest Since April, Led By Chinese Actions

The last week has seen dramatic upwards price action in the bitcoin markets, driven by a series of macro and micro events across the globe. The fallout from Silk Road’s closure turned out to be but a blip in bitcoin’s price history, with significant gains since then. Turmoil in global financial markets and recent news of leading global websites accepting bitcoin may have bolstered enthusiasm for digital currency, but most interesting may be CNY’s definitive recent price leadership.

More Than 44,000 Demand GOP Arrests For "Seditious Conspiracy" Against USA

More than 44,000 people have signed a petition on the MoveOn.org sebsite calling for the Departmnet of Justice to arrest some House Republican leaders for their roles in the givernment shutdown and debt-ceiling debacle. As The Hill reports, the petition singles out Speaker John Boehner (R-Ohio) and House majority leader Eric Cantor (R-Va.), as well as "other decision-making House Republican leaders," for the crime of "seditious conspiracy against the United States of America." While careful to point out that it does not "necessarily endorse the contents of petitions" we thought it ironic that more people successfully completed the petition to arrest the GOP for trying to abolish Obamacare than have successfully signed up for the new law.

Ron Paul Knows "The Longer QE Lasts, The Worse It Will End"

In this exclusive interview with Birch Gold Group, former Congressman Ron Paul shares his opinions on a number of topics, including investing in physical gold and silver, the future of the U.S. dollar and the role of the Federal Reserve.

“The longer [Quantitative Easing] lasts, the worse the correction will be when eventually people give up on our dollar and give up on our debt.”

State Of Emergency Declared As Another Oil/Gas Train Derails In Canada

Thirteen cars came off the tracks around 1 a.m. Saturday -- 9 of which were carrying liquefied petroleum gas and four that were carrying crude oil. The derailment prompted local officials to declare a state of emergency and the evacuation of the nearly hamlet of Gainford about 80km west of Edmonton. As AP reports, an eyewitness noted "the fireball was so big, it shot across both lanes of the Yellowhead (Highway)... there's fire on both sides." According to the latest reports, the train cars remain ablaze as the liquified hydrocarbons continue to leak. Parkland County police chief added "how it exploded and why is yet to be determined," but while only 2 injuries (CN employees) and no deaths have been reported, he noted "it's still a risky situation so we need to contain as much as possible and keep people far away." This explosion comes just 3 months after the disaster that too 47 lives in Lac-Megantic and once again raises questions over the safety of dramatically increased rail traffic from/to the Bakken.

 

JPMorgan To Pay Record $13 Billion Mortgage Settlement But Criminal Case Remains

Under the guidance of Jamie Dimon, adjudged by the mainstream media to be the greatest banker the world has ever  known (hyperbole accepted), a late night Friday phone call (we assume not a drunk-dial) between Attorney General Eric Holder and JPMorgan's general counsel, confirms, according to the WSJ, that JPMorgan will settle their residential mortgage bond suits with the DoJ for $13 Billion - the biggest settelement ever for a single company. Bloomberg reports that an additional $2 billion was added during the negotiations last night. Who knows: perhaps Dimon feels the same about Holder as the rest of the population and made it quite clear, at a cost of another $2 billion. The final wording of the deal is to be finalized but as part of the deal the DoJ expects JPM to cooperate with the continuing criminal probe of the bank's RMBS issuance - which remain unresolved. The settlement is 'unsurprisingly' in line with JPM's expected litigation expenses for Q2/Q3 13 but it would appear they expect worse to come still as the total litigation reserve was recently increased.