Archive - Jun 2014

It was a good weekend for the friends and family of Army Sergeant Bowe Bergdahl: after five years of being held captive by the Taliban in Afghanistan, on Saturday morning it was reported that the 28-year-old native of Hailey, Idaho was finally freed. In exchange for his freedom, the US agreed to also set free five Taliban militants held at Guantanamo. In other words, this was a pre-negotiated settlement or, stated otherwise, a negotiation.  Adding fuel to the fire is the realization that Obama was transacting largely alone: instead of abiding by a legal requirement to give Congress advance notice when prisoners are released from the detainee facility at Guantanamo Bay, Obama once again took unilateral action. Actually it wasn't completely unilateral: it was revealed that the deal was bartered by America's new middle east BFFs (courtesy of the false flagged Syria conflict): officials from Qatar who agreed to keep the detainees in their country for a year.

And then the media circus took over.

Spend more than 30 minutes watching TV in California and you will be bombarded by politicians proclaiming they single-handedly balanced the budget, brought prosperity back to the Silicon Valley alone, and turned water into wine. Yet, oddly, there is one thing none of them seem too quick to admit to. As CBS reports, the state office in charge of keeping track of California taxpayers’ money made tens of billions of accounting mistakes. CBS added it up and came up with a big number: $31.65 billion in errors. That’s more than the gross domestic product of Iceland and Jamaica combined.

We found it surprising that it was none other than Paul Volcker himself who, on May 21 at the annual meeting of the Bretton Woods Committee, said that "by now I think we can agree that the absence of an official, rules-based cooperatively managed, monetary system has not been a great success. In fact, international financial crises seem at least as frequent and more destructive in impeding economic stability and growth." We can, indeed, agree. However, we certainly disagree with Volcker's proposal for a solution to this far more brittle monetary system: a new Bretton Woods.

"We live in an economic age where we’ve simply lost our ability to look at the world as potentially self-organizing (and of spontaneous order - whereby order naturally emerges from bottom-up individual interactions when things are left alone rather than from top-down control), though we suspect we’ll be reminded of it again sooner rather than later. Perhaps our takeaway from economic crises will finally be different the next time around. By all means, let’s brainstorm and see if there are ways to alleviate problems and provide relief to the suffering. But any proposal that involves using coercion on unwilling citizens should be off the table. Anything else is a slippery slope to what we have today - these serial crises."

Ahead of this Thursday's ECB meeting, speculation is rife about what Mario Draghi will announce, and as the following Nomura chart highlights most pundits are convinced that the most likely announcement is a cut in the refi and deposit rate with a probability of around 90%, an LTRO in distant third at 34%, and a full blown QE dead last with 10%. However, as SocGen predicts, which is rather aggressive in its assumptions expecting a negative deposit rate of -0.1%, a targeted LTRO to "boost lending to the private sector", and a "signal" of €300 billion in asset purchases, the bulk of this new-found liquidity will almost exclusively go to boost capital markets, and the wealth effect. As for the broader economy? "We do not expect the 5 June measures to deliver a significant impulse to the real economy."

The relentless influx of paper money makes the wealthy and powerful richer and more powerful than they would be if they depended exclusively on the voluntary support of their fellow citizens. And because it shields the political and economic establishment of the country from the competition emanating from the rest of society, inflation puts a brake on social mobility. The rich stay rich (longer) and the poor stay poor (longer) than they would in a free society.

#Winning "The Lottery"...

As the rest of America began to relax last Monday with a patriotic beer in their hand and a never-forget-hotdog stuffed in their mouth, the machines that run the gold manipulation market appeared to forget that the world was on vacation. The WTF moment that we described here, appears - thanks to Nanex detailed analysis - to have been the actions of yet another rogue HFT algorithm roller-coastering through an after-hours order book in gold futures. Un-rigged?

Several days ago, we looked at the big picture of US immigration, presenting the place of origin of America's 40 million foreign-born residents. However, as is always the case with the US, focusing on the big picture at the national level ignores the nuances at the state level. The following two charts using Pew Research data, compiled by the WaPo, show the dramatic changes in the land of origin of US immigrants, beginning with 1910 when Germany was the primary driver of US-born residents, accounting for 18% of US immigrants, and proceeding through 2010, when Mexico has become the biggest source of foreign-born residents: the birthplace of 29% of all immigrants in the US.

The war on privacy continues unabated, as the U.S. government continues to prove time and time again that it views the citizenry as a bunch of cattle to be branded, herded and dealt with at will. It doesn’t seem to bother anyone in the establishment that the public has lost all faith in institutions and so-called “authority” (a concept which I do not believe in to begin with). The evidence of a growing number of Orwellian databases being created has been available for quite some time. And now, the public faces another sinister and unacceptable invasion to our privacy. A national financial database is being planned, which would contain the most intimate details of our entire financial lives. It may apply to as many as 227 million Americans.

The officially released agenda of the prestigious Bilderberg club meeting (attendees listed here) is not true, claims Russia Today show host Daniel Estulin, a longtime watcher of the ‘secret world govt’ group. He says he obtained the real agenda for this year’s gathering in Copenhagen. An insider leaked the list of talking points for the ongoing Bilderberg conference to the investigative journalist last week, he said. The list has nine items, seven of which he shared... from Nuclear diplomacy and the disturbing rise of Nationalism; it was a focus on Barack Obama's foreign policy that drew our attention most closely...

Dispassionae look at the several events in the week ahead.  

Behind the public-relations facade of "advocacy" and "justice," much of the American legal system is unproductive regulatory friction and the pursuit of extortionist rentier skims. What else could we have done with the billions of dollars squandered on regulatory friction and the pursuit of questionable claims of damage?

With the NSA already reigning supreme when it comes to the capture of virtually every form of instantaneous electronic communication and interchange, aka the "flow" of data, there is one final threshold that the US superspy agency needed to cross before the biggest brother of all would have full control over not only the flow of information, but its stock too: a photographic database of virtually everyone. And courtesy of not only programs like Facebook, but also its access to government photographic data, the NSA is focusing on just that. As the NYT reports, the agency is "harvesting huge numbers of images of people from communications that it intercepts through its global surveillance operations for use in sophisticated facial recognition programs, according to top-secret documents... The agency intercepts “millions of images per day” — including about 55,000 “facial recognition quality images” — which translate into “tremendous untapped potential,”

June is seasonally a poor month for gold and technical damage means gold could be manipulated lower again before half year end ... As one astute commentator said on Twitter this week, being able to acquire cheaper gold given the state of the world today is "like being given discounts on life-rafts on the Titanic ... "