Archive - Jun 9, 2015 - Story

Just when we thought the absurdity that marks every single day of Obama's reign could not possibly be surpassed, we learned that 4 hours (3 hours and 47 minutes to be precise) after the US president vowed to sign a new law banning bulk data collection by the NSA (named, for purely grotesque reasons, the "USA Freedom Act"), the Obama administration asked the secret Fisa surveillance court to ignore a federal court that found bulk surveillance illegal and to once again grant the National Security Agency the power to collect the phone records of millions of Americans for six months.

As Russia adjusts to Western sanctions stemming from the conflict in Ukraine, Gazprom is now settling all crude sales to China in renminbi. At the intersection of the petrodollar's death and yuan hegemony is: the PetroYuan...

Americans are already dispossessed of their livelihoods and careers and their pensions are next. Wherever we look, the fate of populations under Western influence are the same. The Ukrainians are exploited, the Greeks, the British, the Americans. Wherever the West has an imprint, the populations are exploited. Exploitation of the many for the few is the Hallmark of the West, a decrepit, corrupt, and collapsing entity.

In a stunning report by The International Atomic Energy Agency (IAEA), Director General Yukiya Amano fingers Japanese over-confidence and complacency among the main reasons why the country was unprepared to the Fukushima Daiichi disaster of 2011. As Sputnik News reports, Amano exclaimed "there was a widespread belief in Japan that Japanese nuclear power plants are very safe and there would never be a severe accident. This belief was one of the reasons why Japan was not well prepared for severe accident." Four years later, he hopes many have learned the painful lesson that "there can be no grounds for complacency about nuclear safety in any country."

Wishing it was true doesn't make it true--it makes you a chump who fell for the con.

Last week we were reminded of what Elliott Management's Paul Singer highlighted as the "one risk that stands way above the rest in terms of the scope of potential damage adjusted for the likelihood of occurrence" - an electromagnetic pulse (EMP). Specifically, we covered the release of an open letter written to President Obama on the country's concerning level of vulnerability to a natural or man-made EMP. What is stunning about the former CIA Director's comments below is not just the carnage an EMP could wreak, but the apparent rabid intransigence with which the electrical power lobby is fighting any responsibility for defending against one.

Miami condo price appreciation has flatlined for the first time in at least six years as a strong dollar weighs on foreign demand. But don't worry, "this is a different market. You're not going to have a bubble burst". 

The financial pundits gushing over "The China Story" - that the Middle Kingdom's industrialization is a permanent boon to the global economy and China's poor - never calculate the human cost of that runaway industrialization and the vast inequalities it has unleashed. The human cost is staggering...

"China's market is highly inefficient, which means it's relatively easy to produce absolute returns. Chinese retail investors don't have any advantage over us."

The Department of Education says it will forgive federal student loans made to Corinthian Colleges students who can prove they were victims of fraud. The potential cost to taxpayers: nearly $4 billion. With the precedent thus set, the question now is whether continued pressure on for-profit colleges will result in further closures and more petitions from hundreds of thousands of students with hundreds of billions of loans they now know can be legally discharged.

While investor behavior hasn't sunk to the depths seen just before the crisis, Oaktree Capital's Howard marks warns, in many ways it has entered the zone of imprudence. "Today I feel it's important to pay more attention to loss prevention than to the pursuit of gain... Although I have no idea what could make the day of reckoning come sooner rather than later, I don’t think it’s too early to take today’s carefree market conditions into consideration. What I do know is that those conditions are creating a degree of risk for which there is no commensurate risk premium."

Corporate executives offer three main reasons for share repurchases: 1. Buybacks are investments in our undervalued shares signaling our confidence in the company’s future; 2. Buybacks allow the company to offset the dilution of EPS when employee stock options are exercised or stock is granted to employees; or 3. The company is mature and has limited investment opportunities, therefore we are obligated to return unneeded cash to shareholders. The logic behind each of these explanations is in the vast majority of cases is flawed, to be kind, and deceptive to be blunt.

MSCI has not decided to include China stocks in its index yet - as opposed to what mainstream media believes. MSCI instead says the inclusion is "on track" for inclusion but there remains three significant hurdles including liquiidty restrictions.

What happens in Vegas, stays in Vegas... apart from the water. As the following interactive chart from ProPublica shows, water usage in the greater Las Vegas region has more than doubled in the last 40 years and with the drought conditions, every reservoir is near record lows. Welcome To Las Vegas (while water supplies last).