Archive - Jun 14, 2014 - Story

Yesterday, the republican campaign to get to the bottom of IRS' targeting of conservative groups was dealt an absolutely idiotic blow when the IRS, in all seriousness, announced that it had lost two years worth of emails to and from the chief subject of the investigation: former agency official Lois Lerner.  What, however, was simply a bizarre, if idiotic, lie has just been taken to a whole new level of ridiculousness, when moments ago, representative Steve Stockman (R-Texas) announced he would request that the National Security Agency help in the hunt for missing emails to and from the IRS’s Lois Lerner, and recover two years worth of "lost" emails.

The meme “leading from behind” is a fancy way of saying “playing not to lose.” Intellectually it sounds intriguing. The idea can be made to sound esoteric, while at the same time leaving room for multiple ways of defensive posturing when one begins to be questioned whether or not the strategy is either working, or not. You can see the fallacy of this meme play out in mirror form over, and over again across the world of sports. Many of us that understand winning or leading know all to well exactly what happened. They switched from leading and playing for the win to – playing to win by not losing their lead. It never works. Some of the greatest upsets in sports history result from exactly this type of strategy or philosophy. The only difference here is that in sports – it’s just a game. This strategy along with its tactics when applied to nations is far different. The visible results along with the myriad of unseen potential consequences are now becoming quite apparent for anyone willing to look.

Now that Q2 is not shaping up to be much better than Q1, other, mostly climatic, excuses have arisen: such as El Nino, the California drought, and even suggestions that, gasp, as a result of the Fed's endless meddling in the economy, the terminal growth rate of the world has been permanently lowered to 2% or lower. What is sadder for economists, even formerly respectable ones, is that overnight it was none other than Tyler Cowen who, writing in the New York Times, came up with yet another theory to explain the "continuing slowness of economic growth in high-income economies." In his own words: "An additional explanation of slow growth is now receiving attention, however. It is the persistence and expectation of peace." That's right - blame it on the lack of war!

... the world may be burning, so the Obamas go house hunting.

Judging by the gruesome propaganda video being released by ISIS, it is no wonder the Iraqi soldiers and police stripped off uniforms and ran... As The Daily Mail reports, blood-thirsty jihadists are carrying out summary executions on civilians, Iraqi soldiers and police officers - including 17 in one street alone - on their warpath to Baghdad, the UN said today. As a shocking picture of the ISIS insurgency continues to develop, the Islamist group are posting barbaric videos online with the intent of showing the world they will stop at nothing to achieve their end game. The aim is to terrorise Sunnis in Iraq's army and police forces and deepen their already low morale. It appears to be working as that fear is one factor behind the stunning collapse of Iraqi security forces.

The feds are so concerned that more truth about the VA scandal will get out there they have resorted to subpoenas to cover up as much as possible. Of course, considering that the entire Administration, and indeed the entire status quo in America, appears to be essentially a criminal syndicate, there is a naturally an endless stream of abuses that must be concealed from the plebs. One thing that has become entirely clear since the Snowden revelations is the fact that the status quo in both political parties has absolutely zero intent on rolling back unconstitutional surveillance whatsoever. This became completely obvious recently when: Congress Gutted Anti-NSA Spying Bill Beyond Recognition; Original Cosponsor Justin Amash Voted No. Fortunately for those of us interested in transparency, some additional information is starting to come out regarding just how far these crooks are willing to go in order to spy on your every move and conversation.

Today's financial markets make a mockery out of sanity and logic. The difference between what SHOULD happen and what IS happening is perhaps the greatest it has been in our investing lifetimes. If you're perplexed, flummoxed, frustrated, stymied, enraged, bored, irritated, insulted, discouraged -- any or all of these -- by the ever-higher blind grinding of asset prices over the past several years, despite so many structural reasons for concern, you have good reason to be.

As the global election cycle begins to slow down we turn our attention back home to give investors a working roadmap for the Midterm Elections in the US.

It's official - everyone's involved! According to the 21st Century Business Herald, at least 17 financial institutions involved in copper, aluminum and other nonferrous metals financing business face losses of almost 15 billion Yuan (not including the contagious rehypothecated collateral chains involved) due to the over-invoicing of the Qingdao port. Crucially, it appears that the evaporation of collateral (i.e. multiple loans secured by the same collateral) has been confirmed officially and banks such as Standard Chartered have already ceased any new business via this supposedly secured channel.

What is stunning, especially in light of recent revelations that the most clueless economist of them all, Ben Bernanke, now commands a fee of $250,000 per speech (and just happens to be "off the chart"), is just how much these constantly wrong weathermen are paid to spread their particular dose of voodoo. So, without further ado, prepare to be dumbfounded.

Those who have lost trust in Wall Street or actively hate it and everything it stands for (neofeudalism, unbridled greed, the corruption and collusion of the revolving door between the state and Wall Street, etc.) will never change their minds and hand their money to Wall Street to play with. If the primary assets held by Boomers (houses and stocks) both decline for these fundamental reasons, there may be relatively little wealth left to pass on to Gen-Y... if Gen-Y avoids bank debt/mortgages, buying conspicuous consumption luxury goods on credit and investing in Wall Street's scams and skims, this generational lack of demand for housing, stocks and luxury goods will effectively crash the sky-high valuations of these assets. These factors suggest a generational bet against banks, Wall Street, housing and luxury retail stocks.

The graph shows that the true wealth generators of the economy continue to struggle, and now face the prospect of having to pay for the snowballing government debts in the not so distant future. With limited access to funds and rising taxes and costs (with the notable exception of labor, which has its own circular implications), how can they generate enough growth to restore the country’s finances? Bond yields better stay at historical lows indeed.

While the world's short attention span may have been diverted to Iraq where the ISIS insurgents are now knocking on Baghdad's door, and with it - Iraq's vast southern oil fields and infrastructure (which if taken offline would send oil up to $200 according to T. Boone Pickens). the "out of sight, out of mind" conflict in Ukraine, which the western media dropped covering like a hot potato some time in early May for reasons not entirely known, continues to escalate and where the latest outbreak of violence took place overnight when a Ukraine military transport Il-76 was allegedly shot down by separatists in the city of Lugansk as it was about to land.