Archive - Jun 9, 2013

On this day in 1943 the “Current Tax Payment Act”, was passed by Congress. It provides for income taxes on wages and salaries to be withheld by employers from paychecks. The purpose stated was that is was an emergency provision for the War. Sure — but it is still with us today. Milton Friedman, who was a key player in implementing the “tax withholding” system realized what he had done and sought redemption: "... It never occurred to me at the time that I was helping to develop machinery that would make possible a government that I would come to criticize severely as too large, too intrusive, too destructive of freedom. Yet, that is precisely what I was doing."

Chevron, we have a problem.

Moar may not be better after all...

A dispassionate review of a slew of Chinese economic data.  Why the capital inflows are not a result of Qe as much as Chinese investors gaming their own system.  Why the lower inflation is not evidence of Japan exporting deflation, as some have claimed.  Why the decline in imports may be related to prices and foreign demand, more than Chinese demand itself.  

Gross: Surveillance policy of Bush 42 “puts forward a false choice btw the liberties we cherish & the security we provide.” B. Obama 2007

— PIMCO (@PIMCO) June 9, 2013

As we got closer to June 11/12, the date when the German Constitutional Court will conduct a public hearing on the various challenges to the ESM and OMT, the ECB would have no choice but to disclose more details about the real terms of the OMT to assure smooth passage of the OMT, and not to jeopardize the tenuous balance in Europe where things are once again going bump in the night with bond yields suddenly blowing wider on fears the Japanese bond carry trade is set to unwind... The first such notable detail comes courtesy of the FAZ this morning, which "in fear of the judgment of the Federal Constitutional Court, the European Central Bank (ECB) has revealed for the first time the boundaries of their controversial bond buying program... ECB President Mario Draghi announced last year, if necessary, that unlimited government bonds of distressed euro countries would be monetized to save the euro. Meanwhile, however, the central bank has limited this program to a maximum volume of €524 billion and also communicated this to the court." This is the maximum allowable purchases of Spanish, Italian, Irish and Portuguese bonds.