Archive - Feb 2011 - Story

Now that the FCIC has declassified all of its interviews with the people responsible, or profiting, for the housing crisis (among which are those of John Paulson, Hank Paulson, Lloyd Blankfein, Dick Fuld, Jonathan Egol (the man who helped Fab Tourre construct Abacus), Alan Greenspan and of course Agent Orange himself - Angelo Mozilo), there is one interview strangely withheld. That of the man largely at the heart of everything - Ben Bernanke. From Bloomberg: "The Financial Crisis Inquiry Commission, created by Congress to investigate and report on the causes of the market meltdown late last decade, won’t publicly release its full 2009 interview with Federal Reserve Chairman Ben S. Bernanke, a commission spokesman said. The interview is quoted in the congressionally authorized
panel’s final report, which cites the November 17, 2009,
“closed-door” session in 11 footnotes. The Fed chief discussed
a range of topics including the central bank’s failures and why
the government rescued Bear Stearns Cos. and let Lehman Brothers
Holdings Inc. go bankrupt, the FCIC report shows." And yet, it appears to contain information so sensitive it would once again rain fire and brimstone on everyone, and like an audio medusa, lead to widespread petrifying contagion everywhere it was heard. Once again we discover that the Fed has learned nothing from the Pittman episode, nor from the Paul campaign to bring some transparency to its actions. We do learn, however, that the Fed continues to believe it is above the people, and that the information it is privy to will never be voluntarily released to those whom it supposedly serves courtesy its three mandates, all of which have the words "Russell" and "36,000" in them.

An important advance indicator of leading conservative frontrunners for the presidency was won by Criminal Reserve archnemesis Ron Paul. The Washington Times reports: "Texas Rep. Ron Paul  has won the Conservative Political Action Conference (CPAC) 2012 presidential preference straw poll of 3,742 activists, the chairman of the huge annual gathering of conservative activists announced on Saturday. The Republican lawmaker, long a favorite of the party’s libertarian wing, took 30 percent of the votes cast, followed by Massachusetts Gov. Mitt Romney with 23 percent. New Jersey Gov. Chris Christie, who has said he will not be a candidate in 2012, and New Mexico former Gov. Gary Johnson tied for third, with 6 percent of the vote. Former GOP House Speaker Newt Gingrich followed with 5 percent. Tied at 4 percent were Minnesota Rep. Michele Bachmann, Indiana Gov. Mitch Daniels and former Minnesota Gov. Tim Pawlenty. Trailing them was former Alaska Gov. Sarah Palin, who garnered just 3 percent of the vote." Now since the mere prospect of "President Paul" sends shivers of mortal terror down the spine of every self-respecting member of the criminal Wall Street syndicate, does this mean that in order to guarantee 4 more years of Teleprompting, JPM and GS will send the Russell to 36,000,000, the unemployment rate to -15%, and the labor participation rate to -100%, just to make sure that the peasantry is content enough and chooses 4 more years of unmitigated dollar debasement and what is rapidly becoming a weekly iPad cadence? With the popularity of American Idol plunging to record lows, the mission to brainwash America for 4 more years may be just that more difficult. Add 15% inflation and the vassals may actually stirs for once.

Recently, some have started to ask a very pertinent question when it comes to the global Current Account: with every developed and developing country supposedly seeing a surge in exports, just who is it that is doing all the importing? Sean Corrigan from Diapason takes this question, and flips it on its head, as regards the printing of money and the "trade balance" of inflation: if every central bank continues to excuse itself from taking responsibility from what is now a global money printing pandemic, claiming it is merely importing inflation... then who is doing all the inflation exporting? Read on for some brilliant observations...

Charting Austrian Money Supply, the Fed's outright security holdings, and commodity prices. Any questions?

Some pretty amazing developments in the past 48 hours in the world's 2 largest "easy money" central banks, that very few are talking about. If you are a conspiracy theorist this is one you are going to enjoy....First over in Europe, the ECB's head Trichet is facing the end of his term soon. It has been long thought German hawk (hawk = favors fiscal discipline and tighter money) Axel Weber was the shoo in for the job. But he is against handing money out in every direction to any country with its hand out (Greece, Ireland, Portugal, Spain... and someday Italy, France). I was actually fascinated to see how Weber would handle what Europe is doing (which is some combination of TARP + QE lite) since much of it seemed to go against his personal beliefs. But now there will be no opportunity to see how it would have played out. Out of the blue this week, he has withdrawn his name from a job that was presumed to be his... In the U.S., hawks are a rare breed. But there was one sitting very close to Ben B by the name of Kevin Warsh. He is a guy who has been vocally against QE infinity. Yesterday he decided its time to take his services elsewhere.

It's official: as Egypt was burning, Mubarak was stealing the gold. When we reported, presumably jokingly, two weeks ago that the Egyptian Central Bank may have been plundered, it turns out we were pretty much accurate once again. For all those wondering why Mubarak was refusing to hand over power for the past two weeks as hundreds of people were dying, we now have the answer - it was all just to make sure he transferred his assets, especially gold, to safe regimes (in the process paying tens of millions in commissions to that most noble of jobs - the banker class). The Telegraph reports: "A US official told The Sunday Telegraph: "Hosni Mubarak used the 18 days it took for protesters to topple him to shift his vast wealth into untraceable accounts overseas, Western intelligence sources have said...There's no doubt that
there will have been some frantic financial activity behind the scenes. They
can lose the homes and some of the bank accounts, but they will have wanted
to get the gold bars and other investments to safe quarters. The Mubaraks are understood to have wanted to shift assets to Gulf states
where they have considerable investments already – and, crucially, friendly
relations. The United Arab Emirates and Saudi Arabia have frequently been
mentioned as likely final destinations for Mr Mubarak and possibly his
family."As usual, we remind readers that according to the World Gold Council, Egypt had 75.6 tonnes of gold at the end of 2010. Should this number not be reduced following Mubarak's plundering, we will know just how pervasive Tungsten is in the world central banking cartel.

Congressman Ron Paul: please ask Ben Bernanke at the next available opportunity, if the Federal Reserve has lost, due to DV01 changes, or spent, in the form of POMO grants to Primary Dealers, $76.8 billion in taxpayer capital, and please ask him to resolve this finding with his statement that "QE is working."

Seven months ago, when the horrendous August 6 NFP print set the stage for Jan Hatzius to lower his outlook for the economy (and all the other sellside lemmings to follow suit), resulting in the announcement of QE2 three weeks later at Jackson Hole by our dangerous monetary Dr. Moreau (not our definition: Sean Corrigan's - more on that later), we dubbed an article titled "Real U-3 Unemployment Rate When Adjusted For Labor Force Participation: Around 14%" in which we warned that the unemployment rate presented for public consumption is really one big lie. Fast forward to today, when we now read that the topic of labor force participation, and specifically the massive plunge therein, is now seen by one of the brightest  strategist minds, that of SocGen's Albert Edwards, as "one of the scandals of the last decade." We thoroughly agree. In fact, we are certain that the labor force participation rate is the greatest scam the government is attempting to pull in order to create the impression that QE is working. The threat of this issue being comprehended by the broader population is finally so big that it necessitated Goldman Sachs' Sven Jari Stehn to come out with yet another extremely humiliating apologist piece of drivel, explaining how the labor force participation rate is really not at all concerning and that one should welcome the fact that less people are in the "labor pool", as a percentage of the total population, than at any time in the last 26 years. Nothing could be further from the truth, and in fact it underscores Bernanke's latest Catch 22 - the "lower" the unemployment (U3) rate is, the worse the economy is, as more and more workers get terminally disenchanted with their labor prospects, thereby validating just how ugly the truth behind the scenes truly is.

As predicted yesterday, Algeria is "next." They just don't quite know it yet. The attached clip shows the first recorded clashes between demonstrators and police in Algiers. Certainly not the last. And possibly a bigger issue, as Zero Hedge observed some time ago, is that while Egypt and Tunisia do not have major expat populations, Algeria most certainly does. In fact, those of Maghreb descent in France are estimated to be between 3 and 5 million: a potentially dangerous mix. Which is starting to materialize: as France 24 reports 'Hundreds of protesters gathered in the historic Place de la République in Paris Saturday, calling for a "Free and democratic Algeria" in a proud show of solidarity with Algeria's budding anti-government movement."

In "1984," George Orwell describes a totalitarian state that employs "newspeak" to enforce its aims. Rather than merely suppressing statements that endanger the ruling party, newspeak constricts the language itself, making dangerous ideas impossible to formulate. This proves to work far better than post-hoc crackdowns on radical speech, inspiring one state functionary, Syme, to exude, "It's a beautiful thing, the destruction of words." With that in mind, I'd like to explore a problem I see in the current economic debate. The path before the nation in general, and the federal government in particular, is usually framed as a choice between "quantitative easing" and "austerity," and even those who oppose the action represented by the former phrase, and support the course represented by the latter, tend to use these terms as if they truly described the two paths that might be taken. But of course they don't.

John Noyce's latest technical packet is out and it's a doozy, guaranteed to provide hours of entertainment for FX chartists.

Once again our efforts to pick out a reversal day were foiled. Each and every time we think "This Is It!!", the market sells off for one day, and immediately, the dip buying monkeys from the Wizard of Oz swoop in and start buying. Meanwhile, macro traders with a bearish bias sit back, slackjawed in amazement, wonder how the S & P 500 can rally 100% in 2 years with no jobs, no recovery, rocketing commodity prices, and rising interest rates.

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For all those on revolution withdrawal, fear not: there are at least 20 more countries to go (many of which hilariously fall in Jim O'Neill's N-11 list - does the N stand for Next to revolt Jim?). Tomorrow, we may get the next one. Thousands of police are reportedly being drafted into the Algerian capital ahead of planned pro-democracy marches, opposition groups have said. Said Sadi, the head of the Rally for Culture and Democracy (RCD), said authorities were moving to prevent Saturday's protests in Algiers from taking place."

The bears are back summarizing the most recent developments in the silver market including backwardation, some insider "conspiracy theories", the Comex' paper to physical imbalance, the coming endgame, and what all this means in terms of options for one Kamakayz [sic] Bernank.