- JPMorgan Nears Settlement With SEC on London Whale Loss (BBG)
- Without even a wristslap: Iksil to face no U.S. charges in 'Whale' probe (Reuters)
- China’s Credit Expansion Slows as Li Curbs Shadow Banking (BBG)
- China slowdown shows signs of abating (FT), even as...
- Australia central bank Lowers Growth Outlook as Economy Transitions From Mining (BBG)
- SAC Business Plan Goes to Judge, Plan Would Allow Firm to Maintain Business Operations but Restrict Its Ability to Move Assets (WSJ)
- Another buyer of Herbalife? - Norway’s oil fund plans to turn active (FT)
- Mark Carney plays down scepticism over interest rate policy (FT)
- Orders Evaporate for Celebrity Perfumes (WSJ)
As David Stockman, Reagan's infamous Budget Director, writes in his bestseller, The Great Deformation: The Corruption Of Capitalism In America – "the last thing hedge funds do is hedge." The hedge fund complex is "not so much a conventional industry as it is a giant moveable trade": Wall Street trading desks frequently morph into independent hedge fund partnerships, and senior hedge funds often sire “cubs” and then sons of cubs. The protean ability of this arrangement to spawn, fund, and replicate successful momentum trades cannot be overstated, and has "generated trillions of permanent momentum-chasing capital." Ultimately, he warns, "apologists for the Fed’s evisceration of the capital markets could not see... they had unleashed the financial furies in the violent momentum trading modus operandi of the hedge fund casino."
- Fukushima: "300 metric tons of contaminated water were likely leaking into the ocean daily" (WSJ)
- Unexpected strength in China trade data eases some gloom (Reuters) - actually, perfectly expected data fakery
- Pimco, BlackRock Seek to Bar California Mortgage Seizures (BBG)
- How will Amazon's Bezos change The Washington Post? (Reuters)
- Montreal Maine Railway Files for Bankruptcy After Crash (BBG)
- Fed Belongs to Everybody as Public Says It’s Our Money in Crisis (BBG)
- Local Russian TV channel broadcasts rare critical segment about Putin (Reuters)
- Loeb’s Reinsurer With No U.S. Staff Gains From Obama’s Jobs Act (BBG)
- As Berlusconi star fades, daughter Marina tipped as new leader (Reuters)
- Detroit Rattles Muni Market (WSJ)
This insane world was created through decades of bad decisions, believing in false prophets, choosing current consumption over sustainable long-term savings based growth, electing corruptible men who promised voters entitlements that were mathematically impossible to deliver, the disintegration of a sense of civic and community obligation and a gradual degradation of the national intelligence and character. There is a common denominator in all the bubbles created over the last century – Wall Street bankers and their puppets at the Federal Reserve. Fractional reserve banking, control of a fiat currency by a privately owned central bank, and an economy dependent upon ever increasing levels of debt are nothing more than ingredients of a Ponzi scheme that will ultimately implode and destroy the worldwide financial system. Since 1913 we have been enduring the largest fraud and embezzlement scheme in world history, but the law of diminishing returns is revealing the plot and illuminating the culprits. Bernanke and his cronies have proven themselves to be highly educated one trick pony protectors of the status quo. Bernanke will eventually roll craps. When he does, the collapse will be epic and 2008 will seem like a walk in the park.
The bankruptcy of Detroit, though long-anticipated, has unleashed a wave of speculation about the health of other cities in the U.S., and indeed, in the world - for example, China. Despite the visible importance of urban centers and cities for thousands of years, it seems our understanding of their dynamics is still incomplete. Nonetheless, the dramatic decline of Detroit and other industrial cities makes us wonder if there are dynamics that we can identify that could enable us to predict which cities will thrive and which will decay.
When one examines the impending disaster in Egypt, it is important to avoid using a narrow lens and take into account the bigger picture. An Egyptian civil war will not ultimately be about Egypt. Rather, it will be about catalyzing the whole of the Middle East towards breakdown and drawing in larger nations in the process, including the United States. It will also be about triggering energy price increases designed to give cover to the collapse of the dollar's world reserve status. If globalists within our government and within central banks allow the dollar to die today, THEY will be blamed for the collapse that follows. THEY will be painted as the villains. But, if they can create a crisis large enough, that crisis becomes the scapegoat for all other tragedies, including dollar debasement. Egypt is just one of many regions in the world where such a crisis can be fabricated. Right now, it seems to be the most opportune choice for the elites.
Greed; corporate arrogance; lobbying influence; excessive leverage; accounting tricks to hide debt; lack of transparency; off balance sheet obligations; mark to market accounting; short-term focus on profit to drive compensation; failure of corporate governance; as well as auditors, analysts, rating agencies and regulators who were either lax, ignorant or complicit. This laundry list of causes has often been used to describe what went wrong in the credit crunch crisis of 2008-2010. Actually these terms were equally used to describe what went wrong with Enron more than twenty years ago. Both crises resulted in what at the time was the biggest bankruptcy in U.S. history — Enron in December 2001 and Lehman Brothers in September 2008. Naturally, this leads to the question that despite all the righteous indignation in the wake of Enron's failure did we really learn or change anything?
Trough-feeding debtism faces the need to clean up its detritus.
Rising home prices, especially in major cities, are prompting a growing chorus of discontent among ordinary Chinese. Our Japanese friends would no doubt feel more than hint of nostalgia should they visit Beijing. For just like the famous Japanese “bubble economy” of the late 1980s, Beijing has been virtually turned into one big construction site with constantly changing streetscapes. The real estate industry may have played a role in China’s economic development, but it appears to have been for the benefit of the few at the expense of the many. In the long term, the trade-off seems poor. For that, not just the general manager, but the premier too needs to take responsibility.
Elliott Management's 22-page letter to investors has something for everyone as Paul Singer ascribes his uniquely independent wisdom. From the fragility of the financial system to the hubris of academic pretenders; from inflation's various devious impacts on assets and reality to the floundering of the world's bankers; from America's "cooked data" to the pending social unrest in Europe and the perils of centralized power, Singers stresses "the temptation to debase fiat currencies... means owning claims on paper money is an act of either faith or denial." Recent market movements, Singer warns "indicate a world on life-support," and "for every day, month and year that policymakers try to substitute failed, inappropriate and risky QE policies for pro-growth policies, the debt mounts, as does resentment among middle-income families that their situation is not improving." The fact of the matter is that "no government has ever reached fiscal 'nirvana,' yet our central bank (and its peers) continues to push the envelope of risk, confidence and inflation." Despite the confident and brave words in which they are wrapped, central bank actions currently seem underscored by quiet panic.
At a time when Spain is back in the limelight on account of its ever-sprouting corruption scandals, the government is trying to switch public attention to the prospect of impending economic recovery. Last Thursday, when the National Statistics Institute (INE) reported a 0.90 percent drop in the active population unemployment rate (down to 26.26 percent from the previous quarter’s 27.16 percent), Economy Minister Luis de Guindos assured: “Despite all the difficulties, today I am convinced that the worst is over and that the Spanish economy will leave behind the negative growth rates.” Mariano Rajoy’s government may, as its predecessor did, announce “around the corner” recovery to keep the population’s hope alive and dodge uncomfortable matters such as corruption scandals, but in reality the country’s trend is quite worrying.
The Institute of International Finance (IIF) has released data that shows that the credit crunch in China is hitting harder than was thought at first and is secondly at the worst level since the global financial crisis landed on everyone’s plate.
Hopes that Kuroda would say something substantial, material and beneficial to the "three arrow" wealth effect (about Japan's sales tax) last night were promptly dashed when the BOJ head came, spoke, and went, with the USDJPY sliding to a new monthly low, which in turn saw the Nikkei tumble another nearly 500 points. China didn't help either, where the Shanghai Composite also closed below 2000 wiping out a few weeks of gains on artificial hopes that the PBOC would step in with a bailout package, as attention turned to the reported announcement that an update of local government debt could double the size of China's non-performing loans, and what's worse, that the PBOC was ok with that. Asian negativity was offset by the European open, where fundamentals are irrelevant (especially on the one year anniversary of Draghi FX Advisors LLC "whatever it takes to buy the EURUSD" speech) and renewed M&A sentiment buoyed algos to generate enough buying momentum to send more momentum algos buying and so on. As for the US, futures are indicating weakness for the third day in a row but hardly anyone is fooled following two consecutive days of green closes on melt ups "from the lows": expect another rerun of the now traditional Friday ramp, where a 150 DJIA loss was wiped out during the day for a pre-programmed just green closing print.
How does one destroy an idea? Further, how does one destroy the truth? Corrupt governments have been struggling with this dilemma since men wore loincloths and worshiped fire. Fortunately for those of us in the “lower strata” of social organization, honorable ideas and indelible truths have a life of their own. Even when a culture as a whole remains oblivious and unguarded, the facts tend to rise to the surface one way or another. The reality which elitists at least partly understand, is that the truth cannot be destroyed, but it can be forgotten, at least for a time. This is a never-ending process...
- The Citadel-SAC connection (BBG) - just wait until the Citadel-FRBNY connection emerges
- Letter backs Yellen for Federal Reserve role (FT) - or said otherwise, the Democrats would like the Fed to rule (and monetize deficits) for ever
- Obama, Republicans gear up for bruising U.S. budget fight (Reuters)
- Up for Debate at Fed: A Sharper Easy-Money Message (WSJ)
- UBS to Pay $885 Million to Settle U.S. Mortgage Suit (BBG), Banks shiver as UBS swallows $885 million U.S. fine (Reuters)
- Japan finmin Aso: CPI shows gradual shift to inflation from deflation (Reuters)
- Japan's PM calls for high-level talks with China (Reuters)
- Holder Targets Texas in New Voting-Rights Push (WSJ)
- Another Nightmareliner incident: Probe opened as Air India Boeing Dreamliner oven overheats midair (Reuters)
- Samsung Boosts Capital Spending as High-End Phone Demand Slows (BBG)