B+

Why anyone thinks that any one of a group of highly interlinked and interdependent countries heavily reliant on EU trade & toursim in a severe economic downturn facing harsh auterity measures may be doing well in the near to medium term is beyond me!

All you neewd to read.

There were two reasons for today's big initial market move: one was the realization that the next LTRO could be massive to quite massive (further confirmed by a report that the ECB is now seeking a "Plan B"), the second one was that, somehow, even though China's economy came in quite better than expected, and much better than whispered, the market made up its mind that the PBoC is now well on its way to significant easing even though inflation actually came in hotter than expected, and virtually every sector of the economy, except for housing, is still reeling from Bernanke's inflationary exports. While we already discussed the first matter extensively earlier, we now present some thoughts from Standard Chartered, one of the most China-focused banks, to debunk the second, which in a note to clients earlier summarized "what the economy is really doing and where it is going" as follows: "If anything, today’s data is another reason not to expect a quick move to further loosening. The economy is slowing, but not dramatically – so far." This was subsequently validated by an editorial in the China Securities Journal which said there was no reason to cut interest rates in Q1, thereby once again confirming that the market, which in its global Bernanke put pursuit of interpreting every piece of news as good news, and as evidence of imminent Central Bank intervention, has once again gotten ahead of itself. And as the Fed will be the first to admit, this type of "monetary frontrunning" ironically make the very intervention far less likely, due to a weaker political basis to justify market intervention, while risking another surge in inflation for which it is the politicians, not the "independent" central banks, who are held accountable.

It would appear that the German public (and political class to some extent) are beginning to see the European project in the same manner as we described back in July. As the increasing burden of saving the eurozone from its own excess falls on the shoulders of every Tobias, Dirk, and Heike taxpayer in Germany, even industry leaders, such as Wolfgang Rietzle, the CEO of Linde, this weekend according to Reuters, are suggesting a line in the sand has to be drawn and that "if we do not succeed in disciplining countries then Germany needs to exit." This has been very much a view we have held for months, that instead of the periphery limping away one-by-one, the very core of the foundation will simply decide enough is enough or as Reitzle notes (among many other critically insightful comments) "the willingness of countries to reform themselves is abating if, in the end, the European Central Bank steps in." This morning Germany's FinMin Schaeuble added to the potential separation rhetoric with his comments, via Bloomberg:

• *SCHAUEBLE SAYS ECB AS LENDER OF LAST RESORT WOULDN'T CALM MKTS
• *SCHAEUBLE SAYS JOINT EURO REGION BOND SALES NOT A SOLUTION

Hardly reassuring given the dreams of every GGB owner and BTP-exposed insurance company are banking on the ECB cranking the presses to 'secure' nominal returns in the real world. Friday's mass downgrade (and S&P's more interesting Q&A) have perhaps left Germany on the hook for up to 56% of its GDP via the EFSF support mechanisms and as we noted six months ago, the moment for Atlas to shrug draws closer with every downgrade and SMP action.

Pres. Barack Obama has launched new international diplomatic poker with “a trailing hand”. It is impossible to exaggerate the forces at play, economic as well as political, foreign and domestic, and their interplay.

It only took a few years, but we can finally move from A to B:

• ITALY CUT TWO LEVELS TO BBB+ BY S&P, EU OFFICIAL SAYS

Somehow ItBBB+ly doesn't quite have the same ring to it... Oh well, it will still work as pristine collateral with the ECB.

All you need to read.

Remember that whole "US is decoupling" theme so pathologically spread around by two-bit propaganda media outfits staffed by journalism B.A. majors? Time to put it in the trash where it belongs. As long expected, the temp hire surge, so effectively used by retailers to dump inventory below cost (just ask Sears), is over, and in the first week of 2012, Seasonally Adjusted claims soared to 399,000, the highest since November and a number which next week will be revised over 400,000, a decimation of expectations of 375,000 (naturally last week's number was revised upward from 372K to 375K - a long-lasting BLS tradition of fudging data that everyone knows about now). The Non-Seasonally adjusted number was +102,314 claims in the first week of the year. And the real question is how many of these real departures were of the banker type, where the impact on lost withholding taxes going forward, and thus government revenues, will be quite dire. Continuing claims also missed expectations, rising to 3628K from a revised 3609K (expectation was for an unchanged print, pre revision, of 3595K). And the worst news is that the 99-week cliff continues to grab more and more, with 48k people dropping off all rolls, and thus from the labor force completely, meaning the labor force participation rate in January will likely drop to another fresh 30 year low. But the horrendous jobs update was only one part. The other one focuses on actual consumer spending, as confirmed by the major miss in retail sales which were up 0.1% on expectations of 0.3%, but the entire gain was due to car purchases primarily driven by cheap govt-funded subprime credit for GM vehicles. Sales ex-autos actually declined by 0.2%, on an expectation of 0.3% rise: this was the first decline and worst print since early 2010. So much for the consumer-led recovery. And so much for the unemployment pick up. And so much for the decoupling. The chart below shows what will happen as the world finally reconverges, as was posted yesterday.

Ask many people lower on the socio-economic ladder what money is for, you frequently get in response “to buy things” -a mentality leading a circular lack of understanding -leading to a lack of money itself. Capital - or more simply, money - is a proxy for labor.

Today is the three year anniversary of Zero Hedge...

Why Do We Write Again and Again About SOPA?  Because It Would Kill the Internet and Free Speech ...

The circle remained exclusive because real influence, for Mills, was located not in individuals (where it should be for that would release true creative and productive energies from said individual into greater society), but in their access to the “command of major institutions…the necessary bases of power, of wealth, and of prestige.”

We have now entered the fifth year of this Fourth Turning Crisis. George Washington and his troops were barely holding on at Valley Forge during the fifth year of the American Revolution Fourth Turning. By year five of the Civil War Fourth Turning 700,000 Americans were dead, the South left in ruins, a President assassinated and a military victory attained that felt like defeat. By the fifth year of the Great Depression/World War II Fourth Turning, FDR’s New Deal was in place and Adolf Hitler had been democratically elected and was formulating big plans for his Third Reich. The insight from prior Fourth Turnings that applies to 2012 is that things will not improve. They call it a Crisis because the risk of calamity is constant. There is zero percent chance that 2012 will result in a recovery and return to normalcy. Not one of the issues that caused our economic collapse has been solved. The “solutions” implemented since 2008 have exacerbated the problems of debt, civic decay and global disorder. The choices we make as a nation in 2012 will determine the future course of this Fourth Turning. If we fail in our duty, this Fourth Turning could go catastrophically wrong. I pray we choose wisely. Have a great 2012.

If you ever happen to acquire an inclination for being the subject of disrepute and ridicule I highly recommend endorsing the conceit alluded to in the title. Apparently this issue is ‘so obvious’ that even gold bugs and government officials can reach common ground via the contention that I’m deluded. My folly — if you will — is to maintain that dollar debasement can be bullish for the dollar vis-à-vis other currencies at present. Since this long-standing conviction of ours is once again being corroborated by price action in the currency markets I thought I’d attempt to convince you that I’m not completely crazy. Here I outline why dollar debasement is bullish for the dollar against other fiat currencies in this environment.

This is the question of the hour. Which way was it?