Archive - Jul 13, 2014

Market participants are far too levered up, all on the same side, and well behind the monetary normalization curve of when the first rate hike is actually going to occur. 

With the nation teetering on the brink of default amid major inflation pressures at home and growing poverty (and Kirchner facing pressure into next year's election), today's loss in the FIFA World Cup final appears to have lit the blue touch paper. As RT reports, police used tear gas and water cannons to disperse angry fans in Buenos Aires. Following the mass gathering around the Obelisk during the game, fans clashed with riot police as the loss sunk in. There are no reports of civilian injuries but 8 police were hurt. Rio has also seen violence between Argentina fans and others (and Brazil's Rousseff has issued a calming statement).

We track US power consumption on a weekly basis as reported by Barron’s, as we believe this information provides insightful – albeit sometimes "noisy" and seasonally unadjusted – clues about the performance of the economy over time. The expectation is that a more robust economic environment requires more power, although factors like colder winters and warmer summers relative to the norm can greatly skew the analysis. With that in mind, let’s have a look at the weekly historical performance of this indicator going back to 1995.

Scanning the Chinese press, the sense is primarily that problems related to their dysfunctional financial system and the gross lack of personal accountability in its exploitation are being detailed everywhere. Troubles involving mutual guarantee companies in Whenzhou, commodity shippers in Qingdao and elsewhere, Ping An insurance execs, BOC/CITI 'money launderers' in Guangzhou, steel execs, trust fund sellers, stockbrokers front running orders via their personal accounts, real estate developers colluding with their local government buddies - you name it; and the whole superstructure is, of course, intricately interlocking and hence becoming systemically fragile. Every day that goes by, China's "little Dutch boy" needs another finger to plug the new leak he caused by trying to stem the previous one. The risk is, he may soon run out of digits...

Well-known libertarian cartoonist Ben Garrison has previously summarized the state of the States perfectly in this image. As he describes it - the cartoon "shows how the banking and corporate masters (crony capitalist fascists) control both major parties behind the scenes. They keep us distracted with left vs. right while giving us the illusion that voting for one of the other parties will solve things. It won't." It appears his 'prophecy' has grown more and more the reality in the past years...

Don't Panic. But..."The message we're trying to get out is that the plague bacteria is present here in Colorado, and to take necessary precautions to avoid getting infected," is the warning from health officials as a Colorado man is infected with the rarest and most fatal form of the pneumomic plague, an airborne version that can be spread through coughing and sneezing. As Bloomberg reports, it is the first case of pneumonic plague seen in the state since 2004, and rather stunningly, he appears to have contracted the illness from his dog. "We don’t think it’s out in our air," House said. "We think it’s in our dead animal populations." So, in summary, West Africa has the worst breakout of ebola virus in history (which is not under control) and now the US has this 'deadliest form of the plague' - good times, people.

In another indication that the ongoing FX probe is picking up steam, or at least preparing for primetime public PR consumption, the FT reports that US prosecutors are offering immunity deals to junior traders in London. The quo for this quid: rat our the senior staff involved in what has previously been reported to be years of currency manipulation (recall "How Wall Street Manipulates Everything: The Infographics"). And continuing the tradition of the DOJ only focusing on European banks, because apparently nobody in the US ever engaged in manipulation of anything, ever, the "US Department of Justice staff have flown to the UK in recent weeks to interview foreign exchange traders, who have been offered partial immunity in exchange for volunteering information about superiors, people familiar with the situation said."

"The world has changed," explains the 27-year old daughter of David Stevens - CEO of the Mortgage Bankers Association. Despite her father's constant 30-year pitch of the merits of homeownership - and knowing full well that rates are low, rents are high, and owning a home 'builds wealth' - Sara Stevens is not buying. After watching "cousins and other family members go through pretty tough situations in 2008 and 2009," her skepticism is broad-based as Bloomberg reports, t’s more than the weight of student loans, an iffy job market and tight credit -- even those who can buy are hesitant. As Bloomberg so eloquently concludes, when even the cheerleader-in-chief for housing can’t get a rah-rah out of his daughter, you know this time is different.

"The government really needs to get its message out to the American people, and it knows that the best way to do that is by using the American news media, said Shanker. The relationship between the government and the media is like a marriage; it is a dysfunctional marriage to be sure, but we stay together for the kids."

After Germany's thrashing of the host nation in the semi-final, today's final World Cup game was largely a formality and even Goldman predicted a German victory. Sure enough, following some preliminary planning Germany's Mario Götze's kicked the winning goal in overtime Leading to much happiness for the target of endless NSA and CIA spying.

A look at key events and data in the week ahead.  

Presented with no commentary but an awful sense of deja vu all over again...

Aldous Huxley would be doing the "told-you-so-dance" as control of the population (particularly the non-elites) has reached levels only he could have dreamed of. In the latest government plan, hot on the heels of "cash-for-clunkers" and minimum wage hikes, Berkeley - that bastion of California liberalism - has unveiled what can only be described as a "Pot-for-the-poor" scheme. As LA Times reports, under a new ordinance, at least 2% of the marijuana each dispensary doles out needs to be given free to members who have “very low” incomes (under $32,000). So not only is work punished in America, but not working now has 'benefits'... it's only fair.

The following excellent discussion waxes across the defining trends of our time, including market manipulation by central planners, monetary hijinks of the highest order, crony corporatism, clueless and complicit politicians, and the explosion of State control. John sees us hurdling towards an increasingly certain future of banana-republic wealth disparity, currency failures, and civil strife. That is, unless we rise up to assume ownership of our own destiny. Doing so will not be easy, or pain-free. In many ways, the most important important question concerning our collective destiny is: Will we have the courage to take control of it?