Archive - May 2014

Just one day after the FBI issues arrest warrants for 5 Chinese military officials, Caixin reports that Fang Fang - the former CEO of JPMorgan Asia - has been arrested in Hong Kong by the Independent Commission Against Corruption (or anti-graft agency). Coincidental timing we are sure; and while details are sparse, the arrest appears linked to the hiring of the children of Chinese officials. Bloomberg reports that Fang declined to comment after being released on bail (under restrictions not to leave Hong Kong).

Given that zero economists surveyed expected any further QQE in this May BoJ statement, the market's positive knee-jerk reaction to the "unchanged" nature is odd:

*BOJ RETAINS PLAN FOR 60T-70T YEN ANNUAL RISE IN MONETARY BASE (coz it's working so well)
*BOJ SEES DECLINE IN DEMAND AFTER SALES TAX HIKE (whocouldanode?)
*BOJ SAYS EASING IS HAVING INTENDED IMPACT ON ECONOMY (crushing consumer through increasingly expensive import costs?)

The excitement must be based on them saying that "exports have leveled off more or less" and the economy is "recovering moderately." One can't help but feel like this run-stop pop will be faded very quickly... as hope is pushed to July for moar QQE.

"The CIA organised a fake vaccination program in the town where it believed Osama bin Laden was hiding in an elaborate attempt to obtain DNA from the fugitive al-Qaida leader’s family," The Guradian reports. Now, amid a deadly backlash again vaccinations and a resurgence of polio in Pakistan, the White House has promised that the CIA will never again use an immunization campaign as a tool of spycraft. While this is horrible in its own right, there is a much bigger story here. The fact that the United States holds no claim to any sort of moral high ground whatsoever.

Asia's exploding demand for methamphetamine has left them with a problem... too few cooks and not enough ingredients. As AFP reports, strong and growing demand for drugs in Asia is driving up global production of methamphetamine, with seizures in the region tripling in five years to record levels, a UN report below shows. China has had particularly severe problems, it said. In 2008, Chinese authorities seized six tonnes of methamphetamine. That figure soared to more than 16 tonnes in 2012, accounting for about 45 percent of total methamphetamine seizures for Asia that year, the UNODC said. The drug is often trafficked long distances, as we show below, adding the routes being used by drug sellers are becoming increasingly well-trodden. As demand rises, so production has increasingly shifted to Asia with 'Walter Whites' making bases in China, Myanmar, and the Philippinnes.

One of the most deplorable aspects of Greenspan’s monetary central planning was the lame proposition that financial bubbles can’t be detected, and that the job of central banks is to wait until they crash and then flood the market with liquidity to contain the damage. In short, China didn’t “save ” America into a housing crisis; the Greenspan Fed printed America into a cheap debt binge that ended up impairing the residential housing market for years to come. In any event, for those Millennials who do manage to accumulate a down payment by the time they are in their early 30s there is precious little starter home inventory available.  The Greenspan mortgage debt serfs from the previous generation are blocking the way. Monetary central banking is an economy wrecker.  Here is just one more smoking gun of proof.

While we have done our best to expose the utterly disgusting manipulation that occurs day-in-and-day-out in the precious metals markets over the last few years (how the "fix" is manipulated, who is responsible, and the blowback from European investigations), but mainstream US media remains actively ignorant of exposing these realities (even as another 'gold-"fixer"' gets the ax today). But not the Germans. As the following brief documentary exposes "an examination of gold prices reveals machinations fit for a financial thriller." With the Germans still wanting their gold back, we suspect this German TV documentary explaining the "lack of oversight.. and serious manipulations of the gold price," will stir up more than a little public concern about ever getting it back.

In a time before the New Normal "fairness doctrine" where socialized companies such as GM have 60% more recalls in 5 months than they had sales in the prior year, a story such as the following would belong at best to a surreal "Polak" joke. Unfortunately, in this centrally-planned day and age, it is all too real. Reuters reports that in order to boost GDP and to cement that even under hard-core socialism France is still a manufacturing powerhouse, the French national rail company SNCF had ordered some 2000 trains for an expanded regional network from the national rail operator RFF. There was just one problem: the trains were too wide.

Recent developments indicate that North Korea is very quietly beginning to expand its commercial interests. Some of this is due to internal change, but it would seem that much larger geopolitical forces are at work.

A specter is haunting Washington, an unnerving vision of a Sino-Russian alliance wedded to an expansive symbiosis of trade and commerce across much of the Eurasian land mass - at the expense of the United States.

We are by no means experts at identifying instances of fire caught on camera under low illumination conditions, but the following compressed 3 minute video from the official Tepco YouTube feed (where 1 second of the clip represents 20 seconds in real time) showing the Fukushima nuclear power plant between 8:00pm and 9:00 pm last night, and particularly the segment 1:16 into the clip and continuing for about 30 seconds (or about 6 minutes in the real world), certainly looks disturbing.

"The tragedy for all of us would be if the Fed's and the Treasury's and the Congress's reverence for people who make a lot of money left us unprotected against some sudden revelation of the truth that becomes obvious only in hindisght... that a lot of them don't know what they are doing..."

- Martin Mayer, 2002

We have a few things to say about the recent debunking of established monetary theories. Effectively, the BoE joined forces with the rebels in economics who’ve long argued that standard models are bunk. Moreover, the BoE’s report discredits many well-known pundits, some more so than others. We’ll pick on one from the “more so” category: Paul Krugman.

Flies are pesky things buzzing around that leave you infuriated and frustrated as you try to swat them; but nine times out of ten you miss the things. Today, it’s flies that are at the center of a row that may be far more than just economic and may damage relations diplomatically-speaking between India and the EU.

Crimea's secession to Russia - and Putin's gracious acceptance of their request for annexation - has focused all eyes on the peninsula's landmass and rolling tanks; but, as we have noted previously, NY Times reports that when Russia acquired not just the Crimean landmass but also a maritime zone more than three times its size with the rights to underwater resources potentially worth trillions of dollars. It's all about the resources as we have noted previously but Russian officials are quick to play this down, "compared to all the potential Russia has got, there was no interest there," but as one analyst noted, Russia’s annexation of Crimea "so obvious" as a play for offshore riches. No wonder Putin is happy to take on the 'burden' of Crimea.