Archive - Jun 13, 2014

Can't we all just get along and stop crossing red lines? Just when we had run out of fingers to count the number of conflicts around the world that are flaring, Haaretz reports that Hamas called on Palestinians Friday to declare an intifada throughout the West Bank and to confront Israeli "forces of Occupation," be it through a popular uprising or individual action. Earlier Friday, Khaled Al-Batsh, a senior member of Islamic Jihad, called on Palestinians to kidnap Israeli soldiers, adding that "this is a chance to widen the sphere of resistance and return the West Bank to its natural place as the focal point of the struggle and resistance." Your move President Obama; how do you sanction Hamas?

With all eyes focused on the atrocities in Iraq, unarmed civilians are rioting across the world at their status quo leadership. The World Cupo is tamping down hysteria modestly in Brazil (especially as they won) but the situation in Greece - emboldened by the recent euro-skeptic, anti-austerity wins in the European elections - is getting worse. As Keep Talking Greece reports, the striking cleaners have have 2 protesters (and a photo reporter) sent to hospital after riot police rushed the unarmed crowd.

65 year old Richard Gilder Rockefeller, son of former Chase Manhattan CEO David Rockefeller, and great grandson of John D. Rockefeller Sr. has been identified as the deceased in a small plane crash just outside of Westchester Country Airport.  The aircraft, owned and operated by Mr. Rockefeller, was a single-engined Piper PA-46-500TP (registered N5335R). As NYC Aviation reports, though the cause for the incident is unknown, visibility at HPN for the last several hours this morning has been poor, at 1/4 mile or less; and the Airport Manager reports that the aircraft struck some trees just after departure.

The Neofeudal arrangement of credit-capital control is effectively enforced by debt-based consumerism, where everyone who wants to be "cool" (i.e. have a self that is recognized in a Neoliberal order) has to go into debt to be cool for at least one product cycle. When their access to credit runs out, so does their ability to have a recognizable identity in the consumerist social order.

Yesterday, when we presented the latest US naval update, focusing on the distribution of US aircraft carriers around the world and particularly in the middle east, we summarized that "America, which historically has had a far greater naval presence in the middle east, is quite unprepared for the recent dramatic resurgence of Al Qaeda splinter groups. Expect at least one more aircraft carrier to depart in direction Iraq shortly." Turns out "shortly" meant less than one day.

What could be greater for GDP then burning to the ground a luxury house on the brink of collapse... just think of all the broken windows and holes to be redug...

President Obama’s populist, class-warring, shut-out-the-legislature, ignore-the-long-term-consequences romp through every corner of life turned to the education sector. Problems with student loan programs are deep-rooted – thanks mostly to the government’s domination of the market – and were only worsened by Obama’s actions this week. In a better world, policymakers would take a cold, hard look at the effects of federally-funded student loan programs, including the good and the bad. Here are a few such observations that you’re unlikely to hear from your president...

For those playing at home, we offer a little buzzword bingo for today's impromptu Presidential press conference regarding Iraq: "line in the sand", "support", "red line", "drone", "sanctions", "kinetic", "sternly worded email", "no one could have seen this coming", and "boots on the ground." We suspect it's going to be another long-weekend for war correspondents... and journalists (which means it must be time to dump VIX and BTFWWIII).

Hillary Clinton may have left the White House "dead broke" in her own words over a decade ago, but the same can hardly be said about her daughter, Chelsea, who as Politico revealed today, was being paid an annual salary of $600,000 at NBC News before switching to a month-to-month contract earlier this year.

Anxiety over the Qingdao port and warehouse probe is slowly but surely creeping through all the commodities that were used in China's commoditty-financing-deals (as we noted here). With Copper hurting (and gold picking up), Iron Ore prices have tumbled to 21-month lows (near the lowest since 2009) as 'real' demand slows as the economy slows and 'financial' demand is crushed as "banks are more vigilant about iron ore financing." As Bloomberg reports, investigators are trying to determine if individual batches of commodities were used multiple times to secure loans. This is making banks nervous (shadow and non-shadow) and while iron ore inventory is falling, prices are adjusting lower rapidly as traders anticipate "financing problems forcing traders to dump ore."

First it was JPM and Bank of America, now it is Citigroup's turn to confirm that in the New Normal, and especially with no volume to speak of, banks are nothing but piggybank utilities for the government to extract cash from whenever it so desires. From Bloomberg:

• U.S. SAID TO SEEK MORE THAN $10 BLN IN CITIGROUP MORTGAGE PROBE
• U.S. PROBE RELATES TO CITIGROUP'S MORTGAGE-BOND SALES

However, Citi appears less than excited at the prospect of paying $10 billion to buy itself out of trouble. In fact, as the price of justice is being negotiated, Citi has offered only 40 cents on the dollar to tip the scales of what is right and wrong under the Eric Holder regime. Sadly for it, the government wants more.

Having set a deadline of June 16 (next Monday) for pre-payment of gas supplies from Russia to Ukraine, it appears Ukraine officials are willing to take the pain of no energy instead of paying what Gazprom is asking:

UKRAINE PM ORDERS GOVERNMENT, REGIONAL AUTHORITIES TO PREPARE ENERGY SECTOR FOR RUSSIAN GAS CUTS FROM MONDAY

The last negotiation had Ukraine willing to pay $326 and Russia asking $385, which Ukraine said "was not a market price." There are more problems for Europe though as Ukraine's PM has ordered the national regulator to revise 'transportation tariffs' for Russian gas via Ukraine (i.e. to Europe).

This week’s news certainly WASN’T BORING.  Big events and small add up to unfolding CHAOS around the WORLD. This week’s subjects: American Empire on FIRE!,  Out on a LIMB: Credit Unions facing INSOLVECY,  Is rising indebtedness a sign of economic strength?,  Bond YIELDS continue to collapse as the race for yield INTENSIFIES,  George Orwell in Action, Showdown looming at the OK corral!,  Simply UNBELIEVABLE SOVEREIGN credit market action, PHANTOM GDP, Rare INDEED, Must watch video interview with Charles Nenner,European BANKING SYSTEM INSOLVECY

It is hard not to gloat when reading the latest embarrassing mea culpa from Bank of America's Ethan Harris, who incidentally came out with an "above consensus" forecast late last year, and has been crushed month after month as the hard data has lobbed off percentage from his irrationally exuberant growth forecast for every quarter, and now, the year. As a result, BofA has finally thrown in the towel, and tongue in cheekly admits it was wrong, as follows: "our tracking model now suggests growth of -1.9% in 1Q and 4.0% in 2Q for a first half average of just 1.0%.... Momentum is weak, but fundamentals are strong. We have lowered second half growth to 3.0% from 3.4%."

Following last month's drop and disappointing miss, University of Michigan Consumer Confidence just got even worse. Despite record high stock prices and near record high car purcahsing exuberance, consumer confidence tumbled for the 2nd month in a row (just when the pent-up demand of Q1 is supposed to kick in). This is the biggest miss of expectations since Dec 2012 and appears to confirm the lack of exuberance seen in the government's survey data. Inflation expectations dropped to the lowest in 2014 as hopes for the economic outlook dropped to 3-month lows. Not the animal-spirity, wealth-creatingy, exuberance the Fed (and every multiple expansion-hoping muppet) was expecting...