Archive - Jul 11, 2013

Welcome, Brother and Sister. Peace be unto you.  So a while ago we finally had a chance to meet, strike hands and exchange pleasantries, after all this time of crossed schedules and missed opportunities. Chumba has been busy with the trials and tribulations of personal apocalypse. Indeed, we shall all experience our own revealing in one way or another, and sooner rather than later, perhaps sooner than you expect, or want.  Let us sit down now at the table. I'll bring out the board. It'll take some time to set up all the pieces and explain how each operates. After all, if one is to engage in a contest, it is only fair that each player know the parameters of engagement.

The German President, Joachim Gauck, concluded in a recent interview, that the NSA was not to be compared with the Stasi, because, [paraphrasing] "it is not like it was with the Stasi, where there exist big filing cabinets in which all our conversations are written down." No, indeed, nothing like that. As OpenDataCity notes, at the NSA, conversation contents are neither written down nor filed - but digitally recorded, saved and can be searched and found within seconds. In contrast to the Stasi, the NSA can count on new technologies and can therefore collect information in gigantic quantities - in fact, according to their data, 1 billion times more data than the Stasi!

Chinese gold demand, from both individuals and central banks, garnered increasing attention as the gold price rose consistently in the last twelve years. When the gold price declined, many in the West declared the end of gold, but China (along with many other Asian nations) defiantly continued to buy gold and increase their imports. Questions over the legitimacy and transparency of COMEX and the London Gold markets are now becoming louder, especially as increasing numbers of institutions are keen to know what actually backs those contracts. ‘Paper gold’ is on everyone’s lips. As The Real Asset Company notes, Physical gold demand in the most populated country on earth does not seem to be subsiding, yet neither do COMEX and futures volumes generally.

No, last week’s jobs report was not “strong”. It was just another edition of the “born again” jobs scam that has been fueling the illusion of recovery during the entire post-crisis Bernanke Bubble. In short, the US economy is failing and the welfare state safety net is exploding. And that means that the true headwind in front of the allegedly “cheap” stock market is an insuperable fiscal crisis that will bring steadily higher taxes, lower spending and a gale-force of permanent anti-Keynesian austerity in the GDP accounts. And for that reason, the Fed’s strategy of printing money until the jobs market has returned to effective “full employment” is completely lunatic. The bottom-line is that Bernanke is printing money so that Uncle Sam can keep massively borrowing, and thereby fund a simulacrum of job growth in the HES Complex. Call it the Bed Pan Economy. When it finally crashes, Ben Bernanke will be more reviled than Herbert Hoover. And deservedly so.

Nothing says 'wealth' like a luxury Swiss watch (or two), and despite the equity markets of developed 'wealthy' nations resurgent in their inflated-asset-based selves, it seems the demand for luxury watches remains subdued at best. While Asia appears to be a big drag (as we noted here), Europe and the US are also plunging; but have no fear as African sales are up 25% (there's the real wealth effect?). The 'wealth effect' plan appeared to be working until the beginning of 2013 when, in spite of the almost unprecedented and inexorable rise in equities, Swiss watch exports collapsed to their worst levels since the great recession. Transitory blip? Doesn't seem that way as the most recent YoY change is the worst in six months.

China's GDP number should be in the 6.7% range for the quarter.  This is the black swan ...

With the revelation that the federal government, through the National Security Agency, has been collecting phone and Internet records of U.S. citizens in the name of preventing terrorism, Americans are wondering whether private communication exists. In the infograohic below, we explore how this surveillance works and the history of domestic spying programs (because, let’s face it, they’re not new) and how, even with broader knowledge of the government’s activities, a minority of Americans oppose such programs.

The family is one of the fundamental building blocks of society.  If you do not have strong families, you are not going to have a strong society.  Unfortunately, the state of the family in America continues to deteriorate...

While we are told that history doesn't repeat, it seems Baupost's Seth Klarman is oddly prophetic in his rhyming reality vision of the markets from over 20 years ago. This brief 'warning' from one of the most independent-thinking asset managers of our time (and least sheep-like) sum it up perfectly: "Caution has not been a profitable investment tactic for a long time now. I strongly believe it is about to make a comeback."

My muse today was from the movie Network from nearly 40 years ago. In this clip you merely need to substitute global central banks (Fed, ECB, BOE, BOJ and etc) and mega-banks (GS, JPM, C and etc) into the mix.

So much for the lessons of Fukushima. Never mind oil spills, the Russian Federation is preparing an energy initiative that, if it has problems, will inject nuclear material into the maritime environment.

Luckily nobody in the New Abnormal cares about actual cash flow.

With a national debt approaching $17 trillion, Uncle Sam is tightening his belt and looking under the cushions for extra change. But a closer look at his pocket book reveals just how little he knows about where your money is going. The following infographic provides a few examples that will make you think twice about Uncle Sam's accounting skills.

Over the past week there has been some speculation whether the number of Americans who receive food assistance and/or are on disability, outnumber full-time employed workers in the US. Here is the answer.

One minute we hear that Quantitative Easing is going completely, then it’s going a bit and withdrawing in side-steps and little paces and then it’s going to carry on. Where do we stand?