The Economist

In news that is hardly welcome to Chancellor Merkel and her September reelection hopes, German Focus magazine revealed that a substantial 26% of all Germans would back a party that wants to quit the euro. Even more disturbing is that a whopping 40% of all Germans in the prime 40-49 age group are tired of supporting a failed monetary regime and will just say "nein" to the European globalist experiment at preserving the status quo if just given the opportunity. The Italian virus is spreading: the question is which "clown" will show up on the cover of the Economist in six short months, when at least one person will appear on the political scene to take advantage of the populist protest at endless German-backed bail outs, and what as Dylan Grice so eloquently explained earlier, is merely a reaction to central banker central planning manifesting itself in ongoing social breakdown.

The gravy train that poses as the Electoral College in the States is rigged to make it near impossible for anyone other than the Democrat or GOP nominee to get into the White House.... In Europe it is very different. We can vote for the Monster Raving Looney Party – yes there truly is such a thing – the Beer party and one day soon the Blessed Nigel of Farage. To get on the list of candidates over here you have to stump up £500, be a UK, Commonwealth or Republic of Ireland (how did that happen?) citizen, be seconded by 10 voters in the constituency and not be a police officer, in the military or a member of the House of Lords or bankrupt or bonkers. UKIP may well have won the Eastleigh by-election had Farage stood as a candidate – along with 13 others - but as it was Diane James took votes off the Tories and Liberal Democrats in equal measure. This may have been spun as an inconsequential protest vote the happenings in Italy earlier in the week is beginning to cause the establishment some angst.

A few days ago Bloomberg mag did all it could to aliante virtually all racial minorities residing in the US (which in three decades will be the majority) by insinuating that Bernanke's second housing bubble is the sole source of riches for those not of the Caucasian persuasion. Now it is The Economist's turn to provoke well over half of Italy, by alleging that in not voting for technocratic, Goldman-appointed oligarchs who promote solely the banker backer interests, Italy has made a horrible mistake and has ushered in the circus...

When it comes to provocative financial magazine covers, until now this has been the domain mostly of the Economist and Barrons. Which is why we were not surprised to see Bloomberg do all it can (and it sure can afford to do a lot) to steal the spotlight. With this week's cover page of "The Great American Housing Rebound" it may have done just that, for obvious reasons, or rather one politically uncomfortable reason. And just as expected, the blistering critique is already quite fast and certainly furious - precisely as had been intended all along.

A listless overnight session with just the previously noted first disappointing LTRO-2 repayment and the now traditional big beat out of the "other" German confidence indicator, IFO, which beat expectations of 104.9, rising to a 10 month high of 107.4 to attempt to push the economy out of the recessionary slump (just don't mention yesterday's PMI), and nothing on today's US calendar is a fitting way to end the week, and further shows that markets are once more completely oblivious to the risks of the Hung Parliament outcome that this weekend may bring in Italy should the Berlusconi juggernaut maintain its momentum. The EURUSD and the US futures have disconnected once more, with almost all of yesterday's market weakness filled in the overnight session as the good old low-volume levitation returns. Here are the few news items worth reporting.

The chart below, from the Economist, takes a look at how long it would take an individual from any given country to become a millionaire based on "how much the main breadwinner in an average household makes each year (before tax)." No major surprises here: the fastest spawning place for a budding millionaire, a term that has long ago lost its one-time cachet thanks to the world's central banks who have pumped some $14 trillion into the market, is the US, while those hoping to hit the vaunted seven figures in Bulgaria, Mexico and Romania would need to wait about 2-3 average lifetimes before they hit their monetary goal.

Governments Move to Destroy Online Anonymity ... Google Helps

In a surprise announcement, BoJ Governor Shirakawa announced that he will step down on 3/19 (a month ahead of schedule) and while Barclays notes that there had been talk at one point that Mr Shirakawa might step down in a bid to protect the BoJ’s independence in response to Mr Abe’s threats to revise the BoJ Act; the decision, however, appears to have been motivated by policy considerations (the desire to have the governor and deputies start together). At a time when Japan’s stockmarkets are celebrating JPY weakness, Mr Shirakawa’s move provided yet more bounce as the new BoJ leader is expected to be even more dovish. Abe's push for a new governor, however, is meeting resistance from his own cabinet and financial bureaucrats, who fear extreme measures from the central bank may trigger a damaging rise in bond yields. The tussle, which Reuters notes, is testing Abe's resolve, but lies between a slightly less dovish bureaucrat in Toshiro Muto (favored by the opposition) and a banker, Haruhiko Kuroda, who is a front-runner in Abe's camp. With Draghi's comments today, we suspect Abe will err on the side of uber-dovish to fight the currency wars alongside him.

• Tunisian opposition politician shot dead, protests erupt (Reuters)
• China says extremely concerned after latest North Korea threats (Reuters)
• Postal Service to cut Saturday mail to trim costs (AP)
• Debt Rise Colors Budget Talks (WSJ)
• Obama proposes short-term budget fix, Republicans swiftly object (Reuters)
• S&P Analyst Joked of Bringing Down the House Before Crash (BBG)
• Dell’s Bigger Challenge Ahead in Turnaround After Buyout (BBG)
• Some of the Mark Carney Gloss Is Coming Off (WSJ)
• Japan Official Says BOJ Tools Sufficient as Shake-Up Looms (BBG)
• S&P Lawsuit Undermined by SEC Rules That Impede Competition (BBG)
• Heavy Clashes Erupt in Syrian Capital (WSJ)

This year, China is set to burn more coal than the rest of the world combined!

• Fed Pushes Into ‘Uncharted Territory’ With Record Assets (BBG)
• Next up in the currency wars: Korea - Samsung Drops on $2.8 Billion Won Profit-Cut Prediction (BBG)
• China Warns ‘Hot Money’ Inflows Possible on Easing From Abroad (Bloomberg)
• BOJ Shirakawa affirms easy policy pledge but warns of costs (Reuters)
• Merkel Takes a Swipe at Japan Over Yen (WSJ)
• Wages in way of Abe’s war on deflation (FT)
• Italian PM under fire over bank crisis (FT)
• Senior officials urge calm over islands dispute (China Daily)
• Spain tries to peel back business rules (FT)
• Rifts Over Cyprus Bailout Feed Broader Fears (WSJ)
• Soros Says the Euro Is Here to Stay as Currency War Looms (BBG)

In an increasingly globalised economy, we need more global data measurement. The Economist presents a new attempt to measure global GDP. Globally, there was a big and swift return to strong GDP growth, built on the backs of emerging countries and particularly the BRICs. Since early 2010, rather than getting stronger and stronger, global growth has actually become weaker and weaker. This is quite a departure from certain narratives popular today.

As initially reported here yesterday, in what is the biggest news of the week, and possibly the year, the Bundesbank has broken away from its "all is well" posturing exhibited as recently as three months ago, and in a dramatic reversal of its diplomatic position, has demanded repatriation of some of its NY Fed and all of its Paris-domiciled gold. We applaud Herr Wiedmann for this move, although we hope that the German people are allowed to witness, and verify, the arrival of the actual gold as opposed to simply empty crates. Of course, at the end of the day the actual delivery is irrelevant: what matters is this first shot across the bow of the current monetary system - one which juxtaposes sound money versus infinitely dilutable electronic fiat more than ever before - by a major conservative central bank, one in possession of the second largest official gold reserve, second only to the Fed itself. That said, we can only hope that the German request for gold repatriation is not met with the same enthusiastic response that France encountered when it too attempted to repatriate its gold held by London back in the 1930s, just before a whole lot of things in the global economy went horribly wrong...

Presenting two covers to commemorate what may be the most dysfunctional Congress in the history of the US: the 112th, whose final official day is today. The only Congress that will be worse is the 113th, then the 114th and so on.