Archive - Oct 25, 2013 - Story

Russell Brand's excited exchange with stoic Brit Jeremy Paxman this week is a must-see "exchange of new ideas vs old." Among Brand's clearer moments were "stop voting, stop pretending, wake up. Be in reality now, time to be in reality now. Why vote, we know it's not going to make any difference, we know that already." The excellent discourse has prompted this open letter supporting the comedian.. concluding so legitimately nowadays, with Upton Sinclair's infamous quote "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

The basic predicament we are in is that the current crop of leaders in the halls of monetary and political power do not appear to understand the dimensions of our situation. The mind-boggling part about all this is that it's not really all that hard to grasp. Our collective predicament is simply this: Nothing can grow forever. Sooner or later everything must cease growing or it will exhaust its environs and thereby destroy itself.  The Fed is busy doing everything in its considerable power to get credit (that is, debt) growing again so that we can get back to what they consider to be "normal." But the problem is -- or the predicament I should more accurately say -- is that the recent past was not normal.

Sugar may be sweet, but excess consumption leaves a bitter aftertaste: millions of people worldwide are affected by type II diabetes or obesity, costing the global healthcare system billions of dollars every year. As the Credit Suisse Research Institute's 2013 study "Sugar: Consumption at a Crossroad" found, close to 90% of general practitioners in the US, Europe and Asia believe excess sugar consumption is linked to the sharp growth in these health problems.

If your neighborhood is not as safe as it used to be, then you have something in common with the rest of the country.  All over America, crime is on the rise.  According to a government survey that was just released, violent crime in the United States increased by 15 percent last year, and property crime was up by 12 percent.  If violent crime keeps increasing at this rate, it will approximately double in just six years.  But as we wrote about the other day, when the next major economic downturn strikes it will probably greatly accelerate the growth of the crime rate in this country.  Desperate people do desperate things, and as you will read about below, there are people out there that are already stealing entire truckloads of food. 

Is Obama through? That is, have his lies and incompetence finally caught up with him and emasculated what remains of his effectiveness. Has he taken the concept of “lame duck” to new levels? Dan Henninger describes Obama’s credibility problem: "Bluntly, Mr. Obama’s partners are concluding that they cannot do business with him. They don’t trust him." Henninger’s observation does not bode well for US – International relations. Nor is it likely to provide support for new domestic initiatives. The International ramifications are especially dangerous.

As part of Mike Maloney's recent documentary, Ron Paul was interviewed to discuss the monetary system that he proposes. He begins... "Just get the government out-of-the-way, you know, and let the markets decide and apply the rules of  ’no counterfeiting’  to the people and to the government..." as he goes on to discuss everything from The Founding Fathers to how a gold standard could work...

The average 401(k) and other defined contribution (DC) plan participant now defers over 8% of their annual income toward retirement savings through their plan and social security taxes, making it one of the largest expenses for households. However, as HelloWallet found, retirement readiness remains stubbornly low: the typical worker near retirement only has about 2 years of replacement income saved, or about 15 years short of the median lifespan post-retirement. One explanation for the stubbornly low retirement readiness of workers may be an increase in household debt. With more household income going to pay off debt, households may have less money to save and face higher costs of living in retirement. In fact, over 60% of workers accumulated more debt than they contributed to retirement savings between 2010 and 2011.

You don't hear about racial "leaders" like Al Sharpton and Jesse Jackson among Asians or Asian-Americans. Here and there you may see some irresponsible academics peddling that line in the classroom -- some of whom are of Asian ancestry, since no race of human beings is completely lacking in fools. But they do not get the same attention, or draw the same following, as race hustlers operating in black or Hispanic communities. By and large, Asian youngsters rise and fly. No one can claim that there was no anti-Semitism in America, any more than they can claim that there was never any anti-Asian discrimination. There was plenty of both. But that is very different from following "leaders" whose message would only keep them grounded, after the skies were open to them as never before.

Update: As of 6:30 pm Eastern, the NSA's website has been down for 5 hours.

Following our earlier comments on the vulnerabilities of the Obamacare websites, the fact that the United States National Security Agency suddenly went offline Friday is still surprising. As RT reports, NSA.gov has been unavailable globally as of late Friday afternoon, and Twitter accounts belonging to people loosely affiliated with the Anonymous hacktivism movement have suggested they are responsible. It is perhaps not entirely coincidental that there is a major “Stop Watching Us” rally scheduled for Saturday in Washington, DC. We wonder if the 'hackers' had a German or French accent...?

Our advice to recently graduating Millennials? Live long.

It's Friday afternoon, do you know where your fortress-balance-sheet bank's massive settlement deal with the government is...

• *JPMORGAN TO PAY $5.1 BILLION OVER FHFA MORTGAGE CLAIMS
• *FHFA SAYS JPM TO PAY ABOUT $2.74B TO FREDDIE, $1.26B TO FANNIE
• *JPMORGAN PAYS $1.1B TO RESOLVE REPRESENTATION, WARRANTY CLAIMS
• *FHFA SAYS IT'S SETTLED FOUR OF THE 18 PLS SUITS IT FILED IN '11

$4 billion of this appears to be part of the $13 billion settlement 'agreed' last week; but still leaves the criminal cases from what we can tell... Full statement below...

It has been a very interesting week as the Government shutdown/debt ceiling debate debacle moves into the background.  The focus has now turned back towards the fundamentals of the market, economic environment and the ongoing Federal Reserve interventions.  What is becoming increasingly evident is that market participants are once again potentially throwing "caution to the wind" betting on a belief that the Fed's ongoing Q.E. programs will continue to trump valuations and economics.  After all, that has seemingly been the case up to this point.  The problem is that no one really knows how this will turn out.  However, as we discussed earlier this week, it is likely that we are close to finding out answer. In the meantime, here is our weekly list of "things to ponder this weekend."

With US Macro slumping to 3-month lows, is it any surprise that markets everywhere traded with a decidedly Taper-off confidence this week. USD was sold (-0.6% on the week) though commodity currencies (CAD/AUD) were sold also. Stock 'traders' bought every dip, lifting the Russell 2000 for the 8th straight week (first time since 2003). Gold completed its best 2-weeks (+6.4%) in 23 months. Treasuries have been very quiet since Tuesday, ending the week 5-8bps lower in yield. Growth hope faded as Copper (-1%) and Oil (-3%) fell on the week and earnings overall tumbled. Of course, it wouldn't be Friday if we didn't melt-up into the close (helped by a VIX slammer) and sure enough the S&P tagged its all-time highs as panic buying ensued with just minutes left in the week. Headlines will crow of new all-time-highs for the S&P (but credit remains a non-believer, not buying the rip).

As we head into the vinegar strokes of 2013 with the world awash with liquidity and ever ready to BTFATH, we note that the last time the S&P 500 saw two consecutive years when the index did not go negative year-to-date was 1975-1976. As Bloomberg notes, just as in 2012 and 2013, we have not seen one day close below the previous year's closing level but as Marketfield's Michael Shaoul comments "eventually circumstances will change sufficiently to make the equity market a treacherous place," and if history is any guide, just as 1977 saw stocks drop 15%, then 2014 may reacquant investorsd with what "risk" and "volatility" means in US equities.

It's happening again. The US lack of intervention in Syria (and implicit and explicit support for the rebels) has apparently emboldened none other than Al-Qaeda. As the WSJ reports, a flurry of recent attacks by al Qaeda-linked militants in Iraq - strengthened by their alliance with jihadist fighters in Syria - is threatening to undo years of U.S. efforts to crush the group, widening sectarian conflict in the Middle East. Iraqi security officials say al Qaeda-linked fighters from the militant group Islamic State of Iraq and al-Sham, or ISIS, are moving aggressively to re-establish a base of operations in Anbar province, the stronghold of the Sunni insurgency during the U.S.-led war in Iraq.