- Weeks before U.S. election, Mideast gives Obama perfect storm (Reuters)
- Clashes intensify near US embassy in Cairo (Al Jazeera)
- Puppet governments in trouble: Mursi Risks Rift With U.S. or Voters as Islamists Rally (Bloomberg)
- Protests Put Egypt Relations on Edge (WSJ)
- Fed insists politics had no role in decision (FT)
- UBS "rogue trader" fraudulently gambled away $2.3 billion, court told (Reuters)
- Obama Holds Lead in Three Key States (WSJ)
- China's Xi recovering from bad back, could appear soon - sources (Reuters)
- Japan voices anger over Chinese incursion after vessels entered waters around disputed Senkaku islands (FT)
- Goldman Scales Back Junior-Analyst Program; No Contracts for College Hires (WSJ)
- China commentary slams Romney's "foolish" China-bashing (Reuters)
- Aging Baby Boomers Face Losing Care as Filipinos Go Home (Bloomberg)
With the U.S. presidential election right around the corner, Americans are getting themselves all in a tizzy to go to the voting booth and remind the holders of public office who they work for. Because it’s a presidential election, the stakes are looked to as even higher as the media paints the contest between Barack Obama and Mitt Romney as a conflict with extreme consequence. The statist tramps known as mainstream journalists are championing the race as a great ideological battle. The fact that the candidates differ little on policy and vision is purposefully avoided. To the political and intellectual establishment, the show must go on. Their way of life depends on it. No matter how hard boobus Americanus is kicked in the teeth with his own inability to have an effect on government, he still feverishly casts his ballot with faith locked into the system. As Gary North puts it, “democracy is window dressing for elite control.” Sadly, unless there is a radical change of thinking, mankind’s intellect will finally begin to resemble that of a dog who after being beaten unmercifully, happily returns to his master’s side ready once more for another round.
Anti-American violence and hatred is spreading: first Egypt, then Libya, with very tragic consequences, now Yemen. From Reuters: "Hundreds of Yemeni demonstrators stormed the U.S. embassy in Sanaa on Thursday in protest at a film they consider blasphemous to Islam, and security guards tried to hold them off by firing into the air. The attack followed Tuesday night's storming of the United States Consulate in Benghazi, where the ambassador and three other staff were killed. President Barack Obama said the perpetrators would be tracked down and ordered two destroyers to the Libyan coast, but there were fears protests would spread to other countries in the Muslim world." And since the US will not retaliate against any of these attacks on what is technically US territory except with "strong condemnation", expect many more retaliations against America in the middle east in the days ahead as blowback finally blows up. Also, will the US warships headed to Libya now be redirected to Yemen or the next country that decided to burn down its US mission?
US Totalitarianism Loses Major Battle As Judge Permanently Blocks NDAA's Military Detention ProvisionSubmitted by Tyler Durden on 09/12/2012 22:43 -0400
Back in January, Pulitzer winning journalist Chris Hedges sued President Obama and the recently passed National Defense Authorization Act, specifically challenging the legality of the Authorization for Use of Military Force or, the provision that authorizes military detention for people deemed to have "substantially supported" al Qaeda, the Taliban or "associated forces." Hedges called the president's action allowing indefinite detention, which was signed into law with little opposition from either party "unforgivable, unconstitutional and exceedingly dangerous." He attacked point blank the civil rights farce that is the neverending "war on terror" conducted by both parties, targetting whom exactly is unclear, but certainly attaining ever more intense retaliation from foreigners such as the furious attacks against the US consulates in Egypt and Libya. He asked "why do U.S. citizens now need to be specifically singled out for military detention and denial of due process when under the 2001 Authorization for Use of Military Force the president can apparently find the legal cover to serve as judge, jury and executioner to assassinate U.S. citizens." A few months later, in May, U.S. District Judge Katherine Forrest ruled in favor of a temporary injunction blocking the enforcement of the authorization for military detention. Today, the war againt the true totalitarian terror won a decisive battle, when in a 112-opinion, Judge Forrest turned the temporary injunction, following an appeal by the totalitarian government from August 6, into a permanent one.
To all who miss the highly volatile days of August 2011, when as a result of the congressional deadlock on the debt ceiling, and the S&P downgrade of the US, the DJIA swung by 400 points every day for 4 days in a row just to get Congress to come to the "compromise" exposed in painful detail by Bob Woodward a few days ago, fear not: they are coming back, and with a vengeance. Because while last year only the debt ceiling was under discussion, now we get the double whammy of the debt ceiling and the Fiscal cliff. And just so the suspense meter is pushed off the charts early, and the performance gets maximum billing for theatrics if not execution, House Speaker John Boehner has just said he's not confident Congress can reach a budget deal and avoid a downgrading of the U.S. debt rating. Let us paraphrase: there will be no deal until the 11th hour, 59th minute, 59th second, and 999th millisecond, at which point the market will plunge and get Congress to do what it always does: Wall Street's bidding, which now and always, is a smooth and seamless continuation of the status quo.
- China Output Growth Slows as Leadership Handover Looms (Bloomberg); Weak China trade data raises Beijing spending stakes (Reuters)
- Italy Q2 GDP revised down to -0.8% year-on-year on weak domestic demand (Economic Times)
- Troika disagreed with €2 billion in Greek "cuts" (Reuters)
- No Greek bottom in sight yet: Greek IP, Manufacturing Output plunge compared to year earlier (WSJ)
- France's Hollande sees 2013 growth forecast about 0.8 pct (Reuters), France plots tax hikes of up to 20 bln euros (Reuters)
- Euro Crisis Faces Tests in German Court, Greek Infighting (Bloomberg)
- Geithner sells more AIG stock (FT)
- Japan infuriates China by agreeing to buy disputed isles (Reuters)
- Euro crisis to worsen, Greece could exit euro: Swedish FinMin Anders Borg (Economic Times)
- ‘Lead or leave euro’, Soros tells Germany (FT)
- German MP makes new court complaint against euro plans (Reuters)
- Obama super-Pac in push to raise $150m (FT)
With both political parties having concluded their respective rah-rah-fests and each vehemntly proclaiming "The Other Side" as failing miserably; it appears, as Raghuram Rajan points out in his latest article that while America’s presidential election campaign is superficially a debate about health care and taxes; it is much more fundamentally about democracy and/or free enterprise. As he notes, democracy implies regarding individuals as equal and treating them as such, with every adult getting an equal vote, whereas free enterprise empowers individuals based on how much economic value they create and how much property they own. What prevents the median voter in a democracy from voting to dispossess the rich and successful? And why do the latter not erode the political power of the former? The answer relies upon the 'dream' (American or otherwise) of a level playing field and hard-work paying off...
Back in May, we decided to conduct a thought experiment of the absurd as these are usually the best demonstration of modern-day economic insanity, when we extrapolated, based on trailing 12 month average data in the key labor market indicators, namely the number of total employees, the number of unemployed, the size of the labor force, and most importantly, the number of people not in the labor force, just when the US unemployment rate would hit not only zero, but go negative. As a reminder, we found then "that at the current surge of those leaving the labor force, the US unemployment rate will hit 0.0% in December of 2021 and finally go negative, or -0.1% in January 2022." Today, in the aftermath of Friday's farcical jobs data, we decided to update his absurdist thought experiment, because sadly what we thought was absurdity four months ago has proven to be reality. Should the number of people not in the labor force continue to surge at the August rate of 581,000/month, America will be "unemployment free" in October 2016, before the end of the next president's term, which judging by the most recent opinion polls looks to be Obama. The fine print: the labor force participation rate in November 2016 will be a record low 48.1%, and which, if extrapolated further into the future, would see less than a third of eligible US workers have a job by May 2022, as two thirds of the US population live on perpetual government handouts.
Earlier this week, former U.S. president Bill Clinton gave the keynote address to the Democractic National Convention in an effort to lend some of his popularity to Barack Obama. With the unemployment rate still stubbornly high at 8.1%, Obama has lost many of the enthused voters who put him into the Oval Office in 2008. Clinton was tapped to deliver the speech not only because of his image of a wonkish pragmatist but because of his presiding over the booming economy of the late 1990s. Like a prized mule, Clinton was dragged out to give Democrats someone to point to and say that his policies were the hallmark of smart governance. Today, Clinton still takes credit for Greenspan’s manipulated boom. His supporters on the left love nothing more than to point at his presidency as vindication of the backwards theory that higher taxes equal more growth. Clinton wasn’t a policy wonk; he was a politician who dipped into the Social Security trust fund to give an appearance of balancing the budget while the national debt still climbed higher. Through all of his financial scandals, womanizing, aggressive foreign policy approaches, and possible cover ups, it is actually fitting that Clinton is still looked to by the political establishment as someone worthy of respect. He is representative of F.A. Hayek’s timeless lesson: in government the worst rise to the top and state power corrupts.
- Jobs Gauge Carries Election Clout (WSJ)
- Draghi Lured by Fractious EU Leaders to Build Euro 2.0 (Blooomberg)
- Rajoy stance sets stage for EU stand-off (FT)
- China Approves Plan to Build New Roads to Boost Economy (Bloomberg)
- Hollande faces questions on tax pledge (FT)
- Putin Looks East for Growth as Debt-Ridden Europe Loses Sheen (Bloomberg)
- Strike Grounds Half of Lufthansa's Flights (Spiegel)
- The weakest will win in the euro battle (FT)
- Hilsenrath: Fed Economic, Interest Rate Forecasts Will Include 2015 Outlook (WSJ) - because he just figured that out
- Obama Presses Plan for U.S. Resurgence (WSJ)
- Hong Kong to Restrict Sales of Homes at Two Sites to Locals (Bloomberg)
- Drought Curbs Midwest Farm-Income Outlook, St. Louis Fed Says (Bloomberg)
- Draghi Credibility At Stake As ECB Tries To Save The Euro (Bloomberg)
- Clinton Returns to Back Obama (WSJ)
- Taxi fares up 17% in New York City (Toronto Sun)
- High Speed Scandal: Ferrari Incident Rocks China (Daily Beast)
- China’s Richest Man Benefits From Thirst For Soft Drinks (Bloomberg)
- China August export growth seen weak, imports slow (Reuters)
- Death to PowerPoint! (BusinessWeek)
- Sweden surprises with interest rate cut (WSJ)
- IMF demands greater clarity on Irish austerity plans (Reuters)
- At Abercrombie & Fitch, Sex No Longer Sells (Bloomberg)
- And the best for last: California Treasurer Backs Law to Ban Costly Long-Term Bonds (Bloomberg) -> legislating low, low yields
NO FOOD OR BEVERAGES!!!
Obama and Romney Are Both Terrible for Jobs
Since the best theater is that whose 100% assured outcome is not absolutely obvious, Reuters/Ipsos is happy to advise the 47% or so of American eligible voters who will actually participate in the upcoming presidential election that following the GOP convention, Hurricane Issac and the Invisible Obama, Romney has managed to cut Obama's 4 point lead and is now neck and neck with the incumbent. From Reuters: "President Barack Obama enters an important campaign week tied with Republican presidential nominee Mitt Romney, a Reuters/Ipsos poll found on Sunday, leaving the incumbent an opportunity to edge ahead of his opponent at the Democratic National Convention. With the Democrats set to nominate Obama for a second term this week in Charlotte, North Carolina, the race to the presidential election on November 6 is all knotted up at 45 percent for Obama and 45 percent for Romney among likely voters, the survey found." Of course, this being America, all that is needed is for the Democrats to invite Jason Biggs to deliver the Eastwood counter, and Obama's victory will be assured.
Both Mitt Romney and Barack Obama will give us happy talk about maintaining entitlement benefits (e.g., Medicare and Medicaid) that cannot possibly be sustained. They will talk about energy self-sufficiency. They will talk about creating jobs. They will tell us that we can somehow ‘grow’ our way out of our economic distress. But neither candidate will admit that technology now destroys more jobs than it creates, because to do so would be to commit political suicide. The fact is that none of the happy talk will ever come true. Instead, the Federal Government, with the tacit approval of both major political parties, continues to run trillion-dollar-plus deficits year after year in a futile attempt to spend our way out of our economic problems and to sustain an economic model that cannot be sustained. Those who believe that bringing manufacturing back to the US will also bring back jobs are trying to fight a war that has already been fought and lost. Why? The answer is technology. It’s actually a fairly simple process now to bring production of many items back to the US, simply because of automation and robotics. A factory filled with robots can operate 24 hours a day, 7 days a week, 52 weeks a year, so long as the raw material inputs keep flowing into the factory. Robots don’t take breaks, don’t make mistakes, don’t call in sick, don’t take vacations, don’t require expensive health insurance, and don’t receive paychecks. A fully automated robotic manufacturing facility might require only 100 workers, while a traditional assembly line facility might utilize 3,000 workers. That’s a huge difference in the number of jobs. The simple fact is that most of the lost manufacturing jobs are never coming back.