Archive - Nov 5, 2013

The cruelty inherent in animal factory farming is something that we as a species should find completely and totally unacceptable. Indeed, evidence shows that when people are exposed to the nightmarish conditions faced by factory animals prior to consumption they demand change. This is precisely why corporate interests have pushed ag-gag laws throughout the nation in an attempt to criminalize the exposure of these methods.

Having described the US as "worse than Japan in the 90s" during his last appearance, ECRI's Lakshman Achuthan remains adamant that (despite Bloomberg TV anchors' insistence that stocks are at all-time highs must mean something) the US has been in recession since last year and remains so. His comments that "you wouldn't have four years of zero-interest rate policy and quantitative easing if everything was okay," are as cogent now as then as he critically explains, as we have noted here and here, that the attention being paid to 'soft data' surveys (such as ISM) is entirely mistaken since ISM/PMIs are now negatively correlated to actual production. The data (hard data doesn't lie) in hand, he notes, suggest downward revisions and well within the range of a mild recession and "the market is disconnected."

The U.S. House just passed a bill called H.R. 992 - the Swaps Regulatory Improvement Act - that was literally written by mega-bank lobbyists. It repeals the laws passed in 2010 to prevent another meltdown like the one that crashed our economy in 2008. The repeal was co-sponsored by a former Goldman Sachs executive and passed with bipartisan support from some of the House’s largest recipients of Wall Street cash. It’s so appalling... so unbelievable... so blatantly corrupt... that you’ve got to see it to believe it...

As Mike "Hidden Secrets Of Money" Maloney has said many times before, the economic crisis of 2008 was only a speed bump on the way to the main event.  He believes that before the end of this decade there will be an economic crisis so historic that it will eclipse the crash of 29 and the subsequent great depression.  He also believes it is both unavoidable and inevitable, because it is merely the free market releasing the stored up energy from decades of economic manipulation. As Maolney notes, "the best investment that you will ever make in your lifetime is your own financial education," and the following provides a succinct reminder of the top reasons to buy gold and silver...

Just as the European 'markets' have entirely disconnected from fundamental reality, Japan's bond market - the largest in the world - "is dead, with only the BoJ driving prices," Mizuho warns. Crucially, once again just as in Europe, "these low yields are responsible for the lack of fiscal reform in the face of Japan’s worsening finances. Policy makers think they can keep borrowing without problems." Market functions are sacrificed for the sake of ending deflation, but "liquidity has evaporated as the BOJ has gobbled up most of the market." This means that a reduction in monetary stimulus could cause a rapid drop in bond prices, which, just as in the US, "will make it difficult for the BOJ to normalize policy." Simply put, as Bloomberg notes, the BoJ has killed the nation’s sovereign bond market, leaving it unable to reflect either the success of stimulus policies or fiscal risks.

In the midst of the epic dysfunction known as the 16-day government shutdown, we lost sight of the fundamental issue whose inescapable logic cuts across politics and party lines: We are feeding the rapacious appetites of our current selves (we want what we want now) at the dire and escalating cost to our future selves (whom, we assume, will somehow have the patience and resources to bear the burden). If that sounds unworkable and unsustainable, it is...

It’s no secret by now that governments in Europe, Japan and America have spent and borrowed beyond their means. As IceCap's Keith Dicker notes, including both current debt and future unfunded liabilities, it is estimated America owes over $87 trillion dollars, while the Eurozone countries are on the hook for over $89 trillion. That’s a fistful of dollars. From a tax perspective, the incapacity of these super economic powers, becomes all the more clear. America’s annual tax revenue is only $2.5 trillion, while in Europe, they manage to squeak out roughly $5 trillion. From this view, America is leveraged 34.8x their tax revenues, while the Eurozone is leveraged at 17.8x their tax revenue. As Keith points out in his excellent letter, for the US, Japan, and Europe, Elvis has very much left the building on getting back to 'normal'.

Just a month ago, the President and his administration gloated as Republican support plumbed new record low depths amid the shutdown debacle. Just last week, however, amid the ongoing snafu that is the Obamacare launch, the President's approval rating itself dropped to an all-time low (though the media was oddly quiet about that). This week sees another milestone on the verge of being broken as the "glitches" - both technological and physical - continue, stocks surge, and employment stagnates five years after the end of the recession... the President's disapproval rating is within 1 point of its record high.

This is one of the few times where the benefactors or professionals who benefit from the bubbles, fully and openly acknowledge that stock prices and certain other asset classes are completely divorced from fundamental valuations.

A disturbing story is starting to make waves once again on the internet, according to Ben Swann who notes, you can now pay for Starbucks with food stamps. The story, which previously aired on FOX12, sees Jackie Fowler, a Salem, Oregon food stamp recipient, went inside the luxury Starbucks franchise located inside of a Safeway grocery store with the local Fox News station filming. She purchased one tall Frappaccino and a slice of pumpkin loaf. Her total was $5.25. She slid out her Oregon Trail food stamp card, paid in part by the federal government, and handed it to the cashier who processed the transaction. Fowler only made the purchase to assist FOX but it indicates just how deeply the ECBT card has become embedded in US society when, as she notes, coffee's "overpriced as it is, that's money that somebody could be eating with."

Remember the main reason why the Fed should have tapered, namely the illiquidity in the bond market it is creating with its feverish pace of collateral extraction, and conversion of quality collateral into 500x fwd P/E dot com dot two stocks? Here to put it all in context is Scotiabank's Guy Haselmann: "Through its QE policy, the Fed buys $3 of mortgages for every $1 of origination.  The consequence is that secondary mortgage market liquidity has been decimated: it is as bad as when Bear Stearns failed." That's just MBS for now. However, since the Fed has refused and refuses to taper, the same liquidity collapse is coming to Treasury's first, then corporates, then ETFs, then REITs and everything else that the Fed will eventually monetize. Just like the BOJ.

Hi! I’m Amy Johnson-Martinez, the 14-year-old girl who’s saving the earth from environmental destruction. A lot of people don’t understand how the destruction of the earth is connected to our addiction to economic growth. Actually, a lot of people don’t even realize that we’re addicted! Personally speaking, I think it’s kind of weird that economists don’t tell us about this. So I guess it takes a 14-year-old girl to tell you about it! Economists always say, “The economy has to keep growing or else it will collapse.” But it can’t grow forever, because the earth is running out of resources. Actually, it’s already starting to happen. That’s a big reason why the economy is getting worse.

3 months later and it appears hope has reverted (once again) to its new normal reality. "Just one more quarter," we are sure, will be the clarion call from all asunder...

Just over 400-years ago today, a group of 13 conspirators were caught trying to assassinate King James I of England and blow up the House of Lords in what became known as the Gunpowder Treason. Fundamentally, the Gunpowder Treason was about freedom. The English monarchy at the time was controlling nearly every aspect of the economy and their subjects’ lives– from what they could wear to how they could worship.“Sumptuary laws” which regulated private behavior were commonplace. When you think about it, the collapse was inevitable. The Gunpowder Treason of November 5, 1605 may have been a failure for the conspirators, but given enough time, a system so screwed up, so unsustainable, was destined to collapse on itself. We’re not so different in the west today. Is it wise to think that this time is any different?