May 2nd, 2013
The Matrix was a movie released on 33-11-999, or as more commonly formatted (in the USA), 3-31-1999. In the 14 years since it's debut it has become one of the most influential cultural icons of any generation, not only here in America but throughout much of the globe. Everyone, at least those ones in Western sphere societies, somehow, can readily identify with it. I wonder why?
One year after the infamous Jamie Dimon "tempest in a teapot" fiasco, which promptly turned out to be the biggest TBTF prop-trading desk debacle in history, things were going well for JPMorgan. On one hand, the chairman of the TBAC (and thus US Treasury advisor and policy administrator), and former LTCM trader, Matt Zames, was just recently promoted to the sole second in command post at the biggest US bank (and 2nd biggest in the world) by assets, and first in line to take over from Jamie Dimon. On the other hand, one of Mary Jo White's former co-workers, and a JPM defense attorney from Debevoise just became head of the SEC's enforcement division, in theory guaranteeing that the US government would never do more than slap the wrist of JPM in perpetuity. And then, when everything seemed like smooth sailing ahead, the Federal Energy Regulatory Commission (FERC) showed up on March 13, the day before Carl Levin's committee released its latest report on JPM's prop trading blunder, and according to the NYT, alleged that JPM in the past several years, quietly became nothing short than the next Enron. ... But what is worst for JPM, and its brilliant (abovementioned) employee, often times credited with creating the Credit Default Swap product and market (simply an instrument to trade credit with negligible upfront collateral and thus allow equity option-like speculation in the credit realm), is that FERC may be seeking to throw the book at none other than Blythe Masters.
If there was ever a clear sign that the leadership of Japan is fully aware that the country is about enter a terminal economic catastrophe this is it. Using the cover of currency devaluation and a rising stock market, Japan’s Prime Minister, Shinzo Abe, is attempting to make it easier to change the country’s constitution so that they can eliminate freedom of speech and set the stage for a military dictatorship.
After months of legislating soda sizes and steak rarenesses it seems the food police have finally met their match. As The Daily Currant "reports", in protest over the proposed soda ban in NY, the owners of Collegno's Pizzeria in Brooklyn refused to serve Mayor Michael Bloomberg a second slice of pizza during an informal lunch meeting. Ripped from the scripts of Seinfeld, or Pulp Fiction, or, appropriately enough, The Onion, when Bloomberg requested the second slice, the owner retorted, "I'm sorry sir, we can't do that. You've reached your personal slice limit." The exchange quickly escalated with the Mayor dropping f-bombs and the restaurant's owner climaxing with, "there's nothing I can do; maybe you could go to several restaurants and get one slice at each. At least that way you're walking. You know, burning calories." A fuming Bloomberg left the pizzeria and finished his meeting (and more pizza) at a rival restaurant.
Here is why for the 2013 edition of "attempt to decouple reality from stocks (and fail every time)", the global central banks realized that just the Fed (2011), and/or just the Fed and the ECB (2012) would not be enough. Thus, welcome Japan and your unsterilized $75 billion per month, and lots and lots of prayer that third time will be the charm to enable the "market" finally to break free from the tyrrany of evil fundamentals, macro factors and, generally, reality.
Nomura's Richard Koo destroys the backbone of the modern central bankers only tool in the tool-box in his latest paper. "As more and more people began to realize that increases in monetary base via QE during balance sheet recessions do not mean equivalent increases in money supply, the hype over QEs in the FX market is likely to calm down ...The only way quantitative easing can have a positive impact on economic activity is if the authorities’ purchase of assets from the private sector boosts asset prices, making people feel wealthier and thereby encouraging them to consume more. This is the wealth effect, often referred to by the Fed chairman Bernanke as the portfolio rebalancing effect, but even he has acknowledged that it has a very limitmed impact... In a sense, quantitative easing is meant to benefit the wealthy. After all, it can contribute to GDP only by making those with assets feel wealthier and encouraging them to consume more."
The middle class is being absolutely eviscerated, and poverty is soaring to unprecedented heights. The fact that 90 percent of the population is constantly sliding downhill is not good for our society. The United States is supposed to be a land of opportunity with a vibrant free market system that enables average people to make better lives for themselves. Unfortunately, free enterprise is being strangled to death in the United States today. Entrepreneurs and small business are being pounded into oblivion by rules, regulations, red tape and oppressive levels of taxation. Our founding fathers warned that we should not allow such large concentrations of wealth and power, because they tend to funnel the rewards of society into the hands of a select few. The following are 22 facts that prove that the bottom 90 percent of America is systematically getting poorer...
With any and every asset-gatherer capable of forming a sentence being trotted out on business media to proclaim victory and elucidate on why "there is no where else to invest but stocks" and "the US is the cleanest dirty shirt," we thought it might be useful to reflect on just how clean that shirt can remain as the rest of the world's growth slows down significantly. In the last decade, there has been particular growth in inter-regional trade, with a dramatic expansion in trade vis-à-vis Asia, reflecting globalization. At the same time, the deepening in global trade relationships means that the potential for a sudden shift in demand in one region can have a more significant impact on the rest of the world. This has been seen particularly in recent years, with the sharp retrenchment in domestic demand in southern Europe affecting the economy of Asia, particularly Japan. Looking at the rate of increase in regional imports (which we assume is what the 'heads' believe will power the US 'clean' shirt) and the picture is ugly. And while copper is enough of a tell for most, even the IMF (usually extraordinarily optimistic) sees World Trade slowing dramatically - and given these interconnections, perhaps being the cleanest shirt merely shows the stains even more clearly when they finally hit.
The day many have predicted would come, has finally arrived: 100% initial margin on gold. For now it is just one Futures Commission Merchant, in this case ex-CBOT traders Crossland LLC (motto: "Where Speed And Service Matter"), but tomorrow it will be another, and another.
There is not one single example in history in which QE has successfully created jobs. The UK has engaged in QE equal to over 20% of its GDP and hasn’t seen a real recovery in employment. Similarly, Japan has employed QE equal to nearly 25% of its GDP and GDP growth continues to slow while unemployment stays elevated.
What once used to be a field in which men of towering intellect tried to establish, discuss and lay down the tenets of what was widely considered an entirely new science as recently as the late 19th century, has become a field in which a great many rather mediocre intellectuals are mainly serving the interests of the State. Nassim Taleb recently too to task a number of the so-called mainstream economists - assessing and analyzing the flaws of modern policy-making and central economic planning as well as the fractionally reserved banking system. We wish him success in tackling the handmaidens of statism and their pseudo-scientific output. Anyone criticizing the producers of fig leaves for interventionism deserves our support. Of course, if an economist rejects interventionism and supports the establishment of an unhampered free market, then there is obviously no role for him as an 'economic planner' and 'adviser to policymakers' (except for advising them to stay the hell out of the economy and stop meddling with it).
The "predictive capabilities" of Deutsche Bank's amusing permabull strategist Joe LaVorgna are well known to Zero Hedge readers. Just recall that when it comes to forecasting the future, even one Groundhog Phil has a success rate of 71%, or over a standard deviation more accurate compared to Joe "Coin Toss" LaVorgna's 51%. But perhaps there is a way to harness this horrendous track record of being correct about the future precisely half the time. Indeed, as the following analysis conducted by John Lohman proves, predicting NFP payrolls based on simply extrapolating the previous month's number, or for all intents and purposes, "randomly" one month into the future and comparing it to the original actual NFP print, would have led to a smaller absolute median and average error rate than listening to LaVorgna (46 error vs Joe's 56 median error).
Nations are going bust. And the worse things get, the more desperate their tactics become. This isn't the first time that the world has been in this position. This time is not different. History shows that there are serious, serious consequences to running unsustainably high debts and deficits. And those consequences have almost invariably involved pillaging people's wealth, savings, livelihoods and liberties... either directly or indirectly. What's happening right now is playing out in textbook fashion. More taxes, more debt, more printing, more confiscation, less freedom. Many people will resist the change and instead cling desperately to the old system - the cycle of debt and consumption that provided jobs, stability, and prosperity. These people will have their lives turned upside down because that system is gone forever. And in case it still weren't obvious, here is three minutes of clarity from Ron Paul and Jim Rogers..."I would expect that there is going to be a lot more chaos still to come." - Ron Paul; “They won’t take our bank accounts…they will take our retirement accounts.” - Jim Rogers
As is well known, Goldman's Mark Carney is leaving the Bank of Canada on June 1 to take over the UK money printer in a few months, at which point he will proceed to create about GBP25 billion per month out of thin air, pushing the total monthly G-7 liquidity injection to a healthy $200 billion (an annualized rate of $2.5 trillion). Which meant that a successor had to be found. Moments ago we learned just who that is, and surprisingly it does not appear to be yet another Goldman Sachs Partner, MD or even Vice President. Carney's replacement is Stephen Poloz, the former head of Export Development Canada. Promptly upon the announcement Poloz noted that flexible inflation targeting no threat to credibility, and Canada's monetary policy has helped through crisis, and that experience at EDC gives him a feel for Canada's economy. If nothing else, at least he has held a real job. Unlike those mandarins in the Marriner Eccles building. Either way, his monetary stance is largely unknown, although it will hardly be a hurdle to the other lunatics who have taken over the money printing asylum.