Archive - Jun 2014

"It's just going to be screwed. And relatively quickly," warns Tim Barnett, of the Scripps Institution of Oceanography, telling The Telegraph, the situation in Las Vegas is "as bad as you can imagine". After a devastating, 14-year drought drained the reservoir that supplies 90% of the city’s water, the apparently endless supply of water is an illusion as Las Vegas population has soared. As Barnett ominously concludes, "unless it can find a way to get more water from somewhere, Las Vegas is out of business. Yet they’re still building, which is stupid."

Just weeks before Blackwater guards fatally shot 17 civilians at Baghdad’s Nisour Square in 2007, The NY Times reports that the State Department began investigating the security contractor’s operations in Iraq. However, as James Risen (who himself faces jail time thanks to the White House) reports, a senior official of the notorious private security firm allegedly threatened to kill a government investigator leading the probe into the firm’s Iraqi operation. Stunningly (or not), the US embassy sided with him and forced the inspector to cut the visit short. “Blackwater contractors saw themselves as above the law,” Richter added; now we wonder what gave them that idea?

We have forty Centuries of Wage and Price Controls’ and their inevitable failure to draw upon. We know how this game ends, we just don’t know precisely when. As Orwell wrote, "in a time of universal deceit, telling the truth is a revolutionary act.” The reality bears restating: as the good folk of Incrementum rightly point out, "...the monetary experiments currently underway will have numerous unintended consequences, the extent of which is difficult to gauge today. Gold, as the antagonist of unbacked paper currencies, remains an excellent hedge against rising price inflation and worst case scenarios."

Tonight's round of baffle 'em with bullshit is courtesy of a diverging AsiaPacific economic picture that is anything but supportive of the 'reality' being painted by China's official PMI (which printed at 51.0 as per expectations at 2014 highs) followed by HSBC China PMI which missed its flash estimate (with employment dropping to 8mo lows). South Korea PMI collapsed to 10-month lows; Aussie PMI faded further into contraction at 48.9; and then Japan's Tankan dramatically missed expectations, tumbling to 9-month lows (only to be followed by a 51.1 Japan print (3-month highs). Just to complete the "picture", Chinese home prices fell for the first time in over 2 years. The result, USDJPY rallies and Nikkei 225 soars 200 points... baffled?

Janet Yellen is an officious school marm. She constantly lectures us on Keynesian verities as if they were the equivalent of Newton’s Law or the Pythagorean Theorem. In fact, they constitute self-serving dogma of modern vintage that is marshaled to justify what is at bottom an economic absurdity. Namely, that through the primitive act of banging the securities “buy” key over and over and thereby massively expanding its balance sheet, the Fed can cause real wealth - embodying the sweat of labor, the consumption of capital and the fruits of enterprise - to magically expand beyond what the free market would generate on its own steam. Dr. Yellen, of course, claims there are no financial bubbles to worry about because the Keynesian bathtub of potential GDP has not yet been filled to the brim. Perhaps she would like to put in a bid for one of these homes...

As homeownership rates tumble, perhaps it is not just the stagnation of income or piling up of 'other debts' disabling any organic buying frenzy; perhaps, as Bloomberg breaks down, it is the realization that real-estate is nothing less than another boom-bust roller-coaster ride. ??When so much wealth is tied up in one asset, the risk -- or stability -- of a local market can mean a lot to a homeowner and Bloomberg has quantified the 'riskiest' (and most stable) home markets in America... not Vegas, not Phoenix, and not LA...

Here are two very disturbing statistics:

• Every year, 300,000 Americans die from obesity (Source: NIH)
• Every year, 600,000 Chinese die from working too hard (Source: China Youth Daily, China Radio)

The rest, as the Chairmanwoman says, is "noise."

We came, we saw, we left... the keys...

Long before 1984 gave us the adjective “Orwellian” to describe the political corruption of language and thought, Thucydides observed how factional struggles for power make words their first victims, "Words had to change their ordinary meaning and to take that which was now given them." Orwell later explained the reason for such degradation of language, "Political speech and writing are largely the defense of the indefensible." The bottom-line is that tyrannical power and its abuses comprise the "indefensible" that must be verbally disguised; which seems to have never been more appropriate than now in the stream of 'disguised' words we are fed every day...

Under Article 9 of its post-war pacifist constitution, Japan is blocked from the use of force to resolve conflicts except in the case of self-defense; but, as The BBC reports, Japan's Prime Minister Shinzo Abe says he wants a new interpretation of the constitution to be agreed on. This has brought major protests in Japan, climaxing this weekend when a man set himself on fire in central Tokyo in protest at a proposed law which could allow Japan to deploy its military overseas. With stocks falling, JPY strengthening, an economy collapsing, and a surging disapproval rating, it seems Abe needs a 4th arrow - war?

Whoever really runs things these days for the semi-mummified royal administration down in Saudi Arabia must be leaving skid-marks in his small-clothes thinking about Abu Bakr al-Baghdadi and his ISIS army of psychopathic killers sweeping hither and thither through what is again being quaintly called “the Levant.” ISIS has successfully shocked the world over the last two weeks by negating eight years, several trillion dollars, and 4,500 battle deaths in the USA’s endeavor to turn Iraq into an obedient oil dispensary. Things are happening at lightning speed over in the region and beware of how the turmoil spreads from one flashpoint to another.

As propogandists prepare their "it's the other guy's fault" press releases, Ukraine's President Poroshenko issued a statement declaring the cease-fire over...

• *POROSHENKO SAYS UKRAINE TO END CEASE-FIRE IN EASTERN REGIONS
• *POROSHENKO PLEDGES TO MOVE AGAINST REBELS, 'FREE OUR LAND'
• *POROSHENKO BLAMES REBELS FOR FAILURE OF PEACE PLAN IN UKRAINE
• *POROSHENKO SAYS MILITANTS VIOLATED CEASE-FIRE OVER 100 TIMES

Furthermore, his promise to "attack and liberate" the land and resumption of the "anti-terrorist" operations, means civil war is back on (and what appeasrs to be martial law) as he explains Armed Forces, National Guard, the State Border Guard Service, Security Service received appropriate instructions.

The lukewarm war waged by the Nobel peace prize winner is getting warmer by the day. Just out from Reuters:

• UNITED STATES SENDS UP TO AN ADDITIONAL 300 TROOPS INTO IRAQ, DETACHMENT OF HELICOPTERS AND DRONE AIRCRAFT - PENTAGON

Note that "this time" it is not just "military advisors" but outright troops: According to the Pentagon, the deployment is “separate and apart” from military advisers deployed to Iraq.  This force is deploying for the purpose of protecting U.S. citizens and property, if necessary, and is equipped for combat. This force will remain in Iraq until the security situation becomes such that it is no longer needed,” Obama says in letter to Congress.

You know you've made it when you land on the official "yes, you can spy on them" NSA list. As WaPo reports, this exhibit lists the 193 foreign governments as well as foreign factions, political organizations and other entities that were part of a 2010 certification approved by the Foreign Intelligence Surveillance Court. These are the entities about which the NSA may conduct surveillance, for the purpose of gathering foreign intelligence. One thing comes to mind... what about Canada?

"If past is indeed sometimes prologue, this simple chart might be hinting that a rally similar in arithmetical range and time-span – if not in percentage gain – to the Tech bubble itself is becoming dangerously overripe and that, if so, the most propitious time to effect an exit is not when the fat lady interrupts her warbling of the anthem to shriek, 'Fire!' at the audience instead."