Archive - Jun 13, 2015

As we enter Sunday and what may well be the last possibility to get deal done before the "accidental" Grexit scenario is put in play, we thought our Greek readers would be interested to learn that while Lagarde's "apolitical" IMF is digging in tooth and nail against giving Greece even the smallest amount of breathing room, the equivalent of half an our of a typical daily Fed POMO notional amount, yesterday the same Lagarde said that the IMF "could lend to Ukraine even if Ukraine determines it cannot service its debt."

While the benefits to banks and governments of banning physical cash are self-evident, there are downsides to the real economy and to household resilience. Why are governments suddenly acting as if cash money is a bad thing that must be severely limited or eliminated?

Just two weeks after California's farmers - with the most senior water rights - offered to cut their own water use by 25% (in an attempt to front-run more draconian government-imposed measures), AP reports that the California government has - just as we predicted - ignored any efforts at self-preservation and ordered the largest cuts on record to farmers holding some of the state's strongest water rights. While frackers and big energy remain exempt from the restrictions, Caren Trgovcich, chief deputy director of the water board, explains, "we are now at the point where demand in our system is outstripping supply for even the most senior water rights holders."

The issue at hand is: far more people have discovered whether by chance or direct analysis of their own, both the Fed., as well as their gaggle of cohorts throughout academia, as well as in the financial media, are all watching and gaining their clues – from the same “rock.” Furthermore: It’s now self-evident to anyone willing to look. It’s not to see if the rock is wet, dry, or anything else. It’s to make the rock wet, dry, or anything else needed for the narrative. Because today; narrative trumps reality in today’s economic disciplines.

Presented with no comment...

After 27 years, honest price discovery has been destroyed, thereby reducing the nerve centers of capitalism - the money and capital markets - to little more than gambling casinos. Accordingly, speculative rent-seeking in the financial arena has replaced enterprenurial innovation and supply side investment and productivity as the modus operandi of the US economy. This has resulted in a severe diminution of main street growth and a massive redistribution of windfall wealth to the tiny share of households which own most of the financial assets. Warren Buffett’s $73 billion net worth is the poster boy for this untoward state of affairs. The massive and systematic falsification of asset prices which lies at the heart of this deformation of capitalism is a direct and unavoidable consequence of monetary central planning.

In short, the era the phony recovery narrative has come unhinged.  We have no entered a cycle of actual price discovery in which financial assets fall to more accurate values. This will eventually result in a stock market crash, very likely within the next 12 months.

It’s easy to see evil in dead people. Stalin... Hitler... Pol Pot... people who tortured and killed just to feel good. The jaws of Hell must open especially wide to let them in. But who should go to the devil today?

Our modern western financial and banking system with its massive dependency on single interface websites, servers and the internet faces serious risks that few analysts have yet to appreciate and evaluate.

As many as four gunmen fired automatic weapons against the Dallas Police headquarters, and that at least at least two pipe bombs were found outside the police headquarters after the initial shooting. At least one attacker opened fire on Dallas' police headquarters early Saturday, riddling windows and police cars with bullets before fleeing in a van to a suburban restaurant parking lot, where officers surrounded the vehicle in a standoff that has lasted for hours, CNN reports.

The common error of confusing growth with progress goes largely unnoticed, though it permeates all macroeconomic analysis. There is no better example of this mistake than the fallacies behind the interpretation of Gross Domestic Product.

And just like that, Goldman wins again.

"but it's different this time..."

Don’t mess with Texas. Particularly if you happen to be a person who enjoys the freedom to purchase lemonade from two adorable little girls trying to raise money to buy their dad a Father’s Day gift. In that case, you better watch out. The cops are on the case, ever vigilant to protect the unsuspecting citizen from the perils of contraband juice.