Archive - May 14, 2015

What are we going to do once all the water is gone?

"...something like 1984 could very well happen; this is the direction the world is going in at the present time. In our world, there will be no emotions except fear, rage, triumph, and self-abasement... but always there will be the intoxication of power...if you want a picture of the future, imagine a boot stomping on a human face... forever."

“Federal regulation and intervention cost American consumers and businesses an estimated $1.88 trillion in 2014 in lost economic productivity and higher prices. If U.S. federal regulation was a country, it would be the world’s 10th largest economy, ranking behind Russia and ahead of India. Economy-wide regulatory costs amount to an average of $14,976 per household – around 29% of an average family budget of $51,100."

Everything was going fine for Beijing Baoefung Technology and then, the unthinkable happened... 

Monetary policy has now become like a pressure cooker with a defective safety-valve. Central bankers realise it and investors are slowly beginning to as well. Add into this mix a faltering global economy, a fact that is becoming impossible to ignore, and a dash-for-cash becomes a serious potential risk to both monetary policy and the banking system. There is an obvious alternative to cash, and that is to buy physical gold.

According to Fitch, nearly 40% of credit in China is outside bank loans, meaning that between forced roll-overs, the practice of carrying channel loans as "investments" and "receivables", inconsistent application of loan classification norms, and the dramatic increase in off balance sheet financing, the 'real' ratio of non-performing loans to total loans is likey far higher than the headline number.

While massive binges in stock buybacks and accounting gimmicks have continued to blur the actual profitability of businesses, the decline in jobless claims suggests that there is little room from further reductions in body counts. However, that does not mean that businesses must begin rapidly increasing employment and wages. Businesses are indeed hiring, but prefer to hire from the "currently employed" labor pool rather than the unemployed masses. The "bad news" is that for those unemployed, full-time employment remains elusive, and wages remain suppressed due to the high competition for available work.

"...if anyone didn’t think the president was going to f##k [the Pakistani military] they are out of their mind. He was always going to f##k them.... The White House has been very clever about this. They have gone after me personally. They don’t like me boo hoo hoo.... Don’t turn this into some sort of profound anti-American statement."

John McCain may find himself 'back in the (former) USSR' more frequently as the Senator landed on Ukrainian President Poroshenko's list of advisers along with former Georgian President (and current fugitive) Miheil Saakashvili. This should give McCain an opportunity to realize his dream of turning the 'conflict' with Russia into a proper war that self-respecting hawks can be proud of.

It's worthwhile recalling that mainstream economists, the Federal Reserve, government agencies and the mainstream financial media all deny the economy is in recession until it falls off a cliff.

But... what difference does it make...

Just as race relations in America leave the front-pages for a day - as the news cycle briefly and sadly focuses on Amtrak - Miami Beach police department drags the nation back into debate. According to Miami-Dade State Attorney Katherine Fernandez Rundle, more than a dozen Miami Beach Police officers exchanged numerous racist and pornographic emails. "This is a very sad day for Miami Beach," Mayor Levine concluded, after Rundle explained that the officers are involved in 540 cases, with about 30% of them involving black defendants.

This should be good... as we explained earlier, analysts have pointed to a growing rift between the Obama administration and the Gulf’s Sunni states over the emerging nuclear deal with Iran as a chief reason for the snub, though the Saudi king, as well as his Bahraini counterpart, have denied such assertions.

The FDIC explains, banks have grown far larger and even more complex since 2008, and that "[s]uch trends have not only continued, they accelerated as a result of the crisis." The FDIC goes on to suggest that its current tools and business model are “not sufficient to mitigate the complexities of large institution failures." Not only are they not equipped to handle it, they’re not entirely sure what to do: that’s why the FDIC is "seeking comment on what additional regulatory action should be taken..."