Archive - Sep 14, 2012 - Story

A $4 trillion Fed balance sheet in 15 months (40% increase) and guess who is not happy. Yup, you got it.

From the Arabian Spring of hope (although technically protesting soaring food prices, something which is about to happen all over again) to the Arabian Fall of anti-American revulsion in under two years: has to be a blowback record. The latest casualty: the German embassy in Sudan:

• Protestors now inside German Embassy in Khartoum, Sudan - RTRS
• Protesters pull down emblem at German embassy in Sudan, raise Islamic flag, Reuters witness says - RTRS
• Protesters set KFC restaurant on fire in Lebanon over pope's visit, anti-Islam film -RTRS

So: Egypt, Libya, Yemen, Morrocco, Tunisia, Sudan and now Lebanon. Did we miss anyone?

It is scant days to the election and we cannot help but think that our continuing trip to the “presses of creation” is an act of contrivance to support “him that must be obeyed” while shameless in its purpose serves not the “greater good” but the lesser path of political contrivance. But in the meantime it is to be commodities up, oil up, gold up but what of the citizens; what of the people and no hooray from us for the abuse of power. It is a bill that will have to be paid and a scheme that has a cost and a stroke for the government and a stroke against those that have to pay for it. The dislocation between the governing and the governed could not be greater and we take no pride in watching the machinations of men with no thought for this generation; much less those who will follow. A shameless rout and ill gotten gains and a certain sadness for America.

If only the Fed or ECB could print another Spain with the same facility that they engage in currency destruction, (and make no mistake: yesterday's "open-ended" Fed easing, is today's ECB "open-ended" intervention, is tomorrow's BOJ, is Sunday's PBOC, etc.), now might be the time. Because things in Spain, no matter what one is told, are getting progressively worse. The reason: on one hand the continuing surge in regions and total debt, both of which jumped in Q2, on the other hand Spanish bank borrowings from the ECB soared to €389 billion in August, a new record, and up from €376 billion, just as TARGET2 liabilities rose to a new record of €429 billion as well, explaining where that surge in German TARGET2 claims went, on the third hand housing prices collapsed by 14.4% in Q2, the most ever, and tying all the hands together was that the Spanish economy contracted. But please ignore the details. Focus on the important things, such as the surge in the Ibex, the S&P, consumer confidence, gold, crude, etc, however long these continue. Because unless there is such a thing as a free lunch, with every incremental injection, all Bernanke proves is that the underlying reality is far worse than what is telegraphed to the people.

• Weeks before U.S. election, Mideast gives Obama perfect storm (Reuters)
• Clashes intensify near US embassy in Cairo (Al Jazeera)
• Puppet governments in trouble: Mursi Risks Rift With U.S. or Voters as Islamists Rally (Bloomberg)
• Protests Put Egypt Relations on Edge (WSJ)
• Fed insists politics had no role in decision (FT)
• UBS "rogue trader" fraudulently gambled away $2.3 billion, court told (Reuters)
• Obama Holds Lead in Three Key States (WSJ)
• China's Xi recovering from bad back, could appear soon - sources (Reuters)
•  Japan voices anger over Chinese incursion after vessels entered waters around disputed Senkaku islands  (FT)
• Goldman Scales Back Junior-Analyst Program; No Contracts for College Hires (WSJ)
• China commentary slams Romney's "foolish" China-bashing (Reuters)
• Aging Baby Boomers Face Losing Care as Filipinos Go Home (Bloomberg)

Crude futures soaring by nearly 2% overnight to over $100 is what all those evil, evil speculators at work looks like. That, or the Federal Reserve's "all in" bubble reflation policy perhaps. No, it has to be the speculators: the margin hiker-in-chief said so. And for those who are surprised by Crude's move into triple digit territory, which in turn will send gas prices to the highest they have ever been for this time of year just in time for the election, wait until the reality of $150 oil is priced in, which as we explained yesterday, is the matched price for a $4 trillion Fed balance sheet.