Archive - Jun 2014

• Iraqi Drama Catches U.S. Off Guard (WSJ)
• Al-Qaeda Offshoot on NATO Border Threatens Turkish Rally (BBG)
• It's just the snow, people: U.S. Economic Recovery Looks Distant as Growth Lingers (NYT)
• Freed Taliban leaders may remain in Qatar beyond one-year travel ban (Reuters)
• BNP Paribas Executive Chodron de Courcel to Quit Post (WSJ)
• Greenmail is back (WSJ)
• Facebook Places Multiple Bets to Win Messenger Wars (BBG)
• ECB easing to benefit Ukraine, Russia corporate bonds (Reuters)
• Rome Shows the World How Not to Run Bike-Sharing Program (BBG)

With another day of little otherwise completely irrelevant macro news (because following last night's abysmal Australian jobs data one would think the AUD would be weaker; one would be wrong), market participants - all 3 of them - and algos (which have finally uncovered where Iraq is on google maps) are finally turning their attention to the latest conflict in Iraq (because they obviously no longer care about the martial law in Thailand or the civil war in Ukraine), where the Al Qaeda spin off ISIS overnight seized at least 310K B/D in refinery capacity in northern Iraq according to the Police, and what is more concerning, is now less than a 100 kilometers away from Baghdad. Will ISIS dare to venture further south? Keep an eye on crude for the answer.

Sticker shock. Expect to pay a lot. Hellishly hot in the summer and shockingly less sexy than advertised. But the city and local people, called Cariocas, are clean and the crime is greatly exaggerated. The Marvelous City is amazing in many ways. But if you look closely, you see the same old corruption and thuggery, the same painful poverty and injustice, that plague many states. And then there's the Brazilian prostitutes, called programas, who frequent the bars and brothels of Copacabana and Ipanema as well as Central Rio... People in Rio and Brazil are the same as anywhere. They want the same things. Happiness, diversion, laughter, distraction, the so-called good things in life. A slightly larger piece of the pie. The World Cup is just a showcase and a distraction. Bread and circus on a grander scale.

‘Creativity’ isn’t usually a word associated with ‘government’. Words like stodgy, bureaucratic, and incompetent are typically more appropriate. But there is at least one area where bankrupt governments in particular tend to be exceptionally creative - finding unique ways to steal people’s money... and among the most unique just hit the great state of Georgia.

If you don't know SMAC, then you don't know jack. SMAC - Social, Mobile, Analytics, and Cloud - is the ubiquitous term that every startup pre-IPO entrepreneur must use (no matter how awkwardly) in order to garner triple digit P/E valuations. Clearly not as superfluous as Pets.com, Goldman describes the powerful theme in enterprise software, enabling businesses to realign go-to market models with faster and informed decision-making driving an enhanced user experience.

The fact that that the NSA is now claiming it is “Too Big to Comply” with a court order is an extremely important revelation since it further proves that the super rich and super powerful are in no way shape or form subject to the same laws as the rest of us. The mega banks are “Too Big to Fail,” multi-national corporations are “Too Big to Pay Taxes” and the government is just “Too Big to be Useful.” The rule of law no longer exists in America (remember Jon Corzine), which in turn means there is no longer a functioning society. This may not be obvious to most people at the moment, but it will become painfully clear to everyone in time unless these trends are reversed.

Mike Maloney (of The Hidden Secrets of Money) has demonstrated that that every 30-40 years the world has an entirely new global monetary system, that the current monetary system (the U.S. dollar standard) is aging and becoming unstable, and, just like the previous monetary systems, will soon implode. The following wide-ranging clip shows that the "Nails in the Coffin of the Dollar Standard" are now coming faster and are more furious than ever before. He believes that there will be a global currency crisis before the end of this decade and that the days of the dollar standard are numbered. This will lead to a massive deflation followed by an overnight devaluation of the dollar and huge overnight revaluation of gold, and, though it will be painful for most, it is the greatest opportunity in history for those who are prepared.

Have you heard the one about the “economic recovery” in the United States? It’s quite funny, but it is not actually true. Every day, the establishment media points to the fact that global stock markets have soared to unprecedented heights as evidence that the economy is improving. But just because a bunch of wealthy people have gotten temporarily even richer on paper does not mean that the real economy is in good shape. In fact, as you will see below, things just continue to get even tougher for the poor and the middle class.

Many of you probably heard the news yesterday that teachers unions received a nasty (and well-deserved) blow from the Los Angeles Superior Court. So when I was listening to the radio yesterday, and the reporter was saying that California teachers are granted "tenure at eighteen...." I naively assumed the next word was going to be "years." Nope. It was "months." After just eighteen months, these people get what is effectively guaranteed lifetime employment. Even, as in the court's case, the teacher just sleeps at their desk or browses the web.

The World Bank joined the hallowed ranks of the IMF and admitted it was clueless last night, slashing growth estimates for every developed and developing nation from Brazil to the US. The "bumpy start" as they called it merely exacerbated what is now becoming a dismal joke as the death cross of GDP growth expectations and world stock market valuations diverge in an ever more fragile manner.

"When an activist movement holds the moral high ground against a repressive establishment power structure, the establishment’s primary recourse is to target the character of its principles. The secondary recourse is direct confrontation. If a dissenting organization is not mindlessly vicious in its methods, then simply make it 'appear' vicious. If it is not hateful in its rhetoric, then artificially tie it to people who are. And if a government really needs to kick-start a crackdown, it can engineer its own man-made calamities and blame the groups that most threaten its authority."

And just like that the war in Iraq, "Bush's war" according to so many, is about to come back with a vengeance this time under Nobel peace prize winning president, and what makes it most grotesque is that this time the US will be waging combat with at a military force that it itself is training and arming in neighboring Syria. Which of course is good news for the military-industiral complex and US Q3 GDP, if not so good for millions of innocent civilians soon to be known as "collateral damage."

• ECONOMICS AND BUSINESS PROFESSOR WITH DIVINITY DEGREE
• FAN OF AYN RAND
• ARGUED RELIGION PLAYS ROLE IN ECONOMIC GROWTH RATES
• OPPONENT OF IMMIGRATION REFORM
• FACE-OFF AGAINST FELLOW FACULTY MEMBER
• WAS CRITICIZED BY CANTOR FOR BEING A LIBERAL

In order to back the dollars now in circulation and on deposit -- about $2.7 trillion -- with the approximately 261 million ounces of gold believed to be held by the U.S. government, gold prices would have to rise as high as $10,000 an ounce. Who said gold is not money?

A shocker from Bank of America: "The number of new commercial loans made by BAC has declined notably over the first half of the year. Measured as an indexed level to cycle peak (which was December 2005), the data show that the recent drop was the largest since the recovery began." Oops. If this is accurate then not only is the Fed fabricating loan data outright, it is massively misrepresenting the general direction of loan creation altogether. In fact, if loans are contracting, when one adds the decline in reserve "asset" creation, then banks are set for a world of pain come October when QE is set to end!