Corruption

Reforms are the only way to avoid systemic crisis, rebalance the economy, and unleash growth potential. Barclays notes that government, SOE, factor price and fiscal reform are most needed, though progress is likely to be faster on financial, tax and social security reform. Hopes are high, raising the risk of disappointment, but most think the government will try to meet expectations. History shows that economic growth tends to be lower after major third plenum meetings. This is because structural reforms, while good in the longer term, tend to slow growth in the near term. In advance of its release, the Development Research Center of the State Council, China’s official think tank, presented its own reform proposal – the so-called “383 plan” – which offers a glimpse of the direction that the reforms will take.

Venezuela's relatively new government has adopted arguably the best and brightest socialist policy wielded by both Hollande and Obama, namely the "fairness doctrine." However, in this case it is not about what is a "fair" tax for the wealthy (as taxes in Venezuela's socialist paradise will hardly do much to build up the desperately needed foreign currency reserves), but what is a "fair" price for electronic appliances like flat screen TVs, toasters, and ACs. The result is that Maduro's government now determines what equilibrium pricing should be. The reason for this latest socialist victory over the tyranny of supply and demand is that overnight Venezuela's President Nicolas Maduro ordered the "occupation" of a chain of electronic goods stores in a crackdown on what the socialist government views as price-gouging hobbling the country's economy. Various managers of the five-store, 500-employee Daka chain have been arrested, and the company will now be forced to sell products at "fair prices," Maduro said late on Friday.

TedBits - Newsletter

The U.S. House just passed a bill called H.R. 992 - the Swaps Regulatory Improvement Act - that was literally written by mega-bank lobbyists. It repeals the laws passed in 2010 to prevent another meltdown like the one that crashed our economy in 2008. The repeal was co-sponsored by a former Goldman Sachs executive and passed with bipartisan support from some of the House’s largest recipients of Wall Street cash. It’s so appalling... so unbelievable... so blatantly corrupt... that you’ve got to see it to believe it...

The ObamaCare website rollout fiasco, joined by the bait-and-switch “You can keep your current insurance (not)” tempest, obscure the fundamental quandary about so-called health-care in America: that it is a gigantic racket structured to allow countless layers of grift and counter-grift. The end product of all that artifice is that medical care costs twice as much in America as any other civilized country, and that it has to be operated by a cruel and despotic matrix of poorly coordinated bureaucracies that commonly leave people more disabled financially than the diseases that brought them into the system. ObamaCare was designed to work like a giant roll of duct tape that would allow the current cast of characters in charge (Democratic Progressives) to pretend that the system could keep going a few years longer.

What is the common element between Liborgate, the Fed manipulating capital markets, China hoarding gold, and the recent ubiquotous NSA spying revelations? At one point, before they became fact, they were all "conspiracy theories" as were the Freemasons, the Illuminati, McCarthy's witch hunts, 9/11, and so many more. The same theories, which are now part of a Cambridge University study titled Conspiracy and Democracy,  which looks at the prevalence of conspiracy theories and what they tell us about trust in democratic societies, about the differences between cultures and societies, and why conspiracy theories (ostensibly before they become fact) appear at particular moments in history. But, at its core, whether conspiracy theories will, as the BBC summarizes, it, eventually destroy democracy.

"The employment situation in America is in a state of serious dysfunction," is how Elliott Management's Paul Singer begins his discussion of the problems (that existed before 2008) that are getting worse... "A related problem in America is benefits policies that encourage dependency. This is insidious and life-draining, because a balance must be struck between helping those truly in need and providing harmful incentives for able-bodied people not to work. If the government makes it less economically attractive to work than to receive a check, the predictable result will be an increase in handouts and a drain on the productive sectors of the economy."

It seems like it was an eternity ago that Obama was doing his post-government shutdown gloating media tour, when day after day the world was bombarded with news of the GOP's record low popularity rating, paradoxically following their attempt to do what even the president is now desperate to achieve: delay Obamacare. Well, the tables have turned and now that the government shutdown is history, at least until January, and the public focus has shifted to where it should have been in the first place - namely the embarrassing ponzi scheme experiment that is Obamacare, and the epic failure surrounding its rushed rollout - it is Obama's turn to suffer a record low rating, which is precisely what happened according to a just concluded WSJ/NBC News poll.

• U.S. spy chiefs face Congress amid spying rift with Europe (Reuters)
• Deutsche Bank income hit by €1.2bn of legal provisions (FT)
• China's second tapering attempt fails: China central bank seeks to reassure money markets after rate spike (Reuters)
• UBS Takes Action Against Staff in Foreign-Exchange Probe (WSJ)
• Saudi Arabia frees man jailed for Mohammad tweets (Reuters)
• Tax Revolts Hit Hollande as Farmers, Soccer Clubs Protest (BBG)
• German parliament to meet over U.S. spying scandal (Reuters)
• Google Nears Smartwatch Launch (WSJ)
• How to end gridlock in DC? Pork projects (Reuters)
• UBS ordered to increase capital reserves (FT)

If one (such as everyone at the Federal Reserve) thought that the world's greatest artificial "wealth effect" would also generate the world's happiest people, one would be dead wrong.

Take Venezuela - Hugo Chavez' socialist paradise, which was recently inherited by Nicolas Maduro, when he proceeded to not only completely devalue the local currency but to engineer, through such exquisite central-planning that even the Politburo at the Marriner Eccles building is green with envy, the highest returning stock market on earth in 2013. Alas, either the locals are not quite as impressed with the Caracas' "stock market" YTD return of over 300% (which doesn't quite cover the loss in purchasing power for what things one can actually purchase in Venezuela), or the chronic toilet paper shortages remind them that the phrase socialist utopia is the world's greatest oxymoron. As a result, president Maduro has decided to boldly go where no socialist has gone before and has unveiled a new Vice Ministry of Supreme Social Happiness, whose primary purposes will be to enforce "happiness." In other words,  something along the lines of the beatings will continue until happiness returns...

Russell Brand's excited exchange with stoic Brit Jeremy Paxman this week is a must-see "exchange of new ideas vs old." Among Brand's clearer moments were "stop voting, stop pretending, wake up. Be in reality now, time to be in reality now. Why vote, we know it's not going to make any difference, we know that already." The excellent discourse has prompted this open letter supporting the comedian.. concluding so legitimately nowadays, with Upton Sinclair's infamous quote "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

In his last book, The Five Stages of Collapse, Orlov viewed collapse through rose-colored glasses - after all, it is human nature to try to be optimistic no matter what; and so almost subconsciously crafted a scenario where industrial civilization fades away quickly enough to save what's left of the natural realm, allowing some remnant of humanity to make a fresh start. Ideally, it would start of with a global financial collapse triggered by a catastrophic loss of confidence in the tools of globalized finance. That would swiftly morph into commercial collapse, caused by global supply chain disruption and cross-contagion. As business activity grinds to a halt and tax revenues dwindle to zero, political collapse wipes most large-scale political entities off the map, allowing small groups of people to revert to various forms of anarchic, autonomous self-governance. Those groups that have sufficient social cohesion, direct access to natural resources, and enough cultural wealth (in the form of face-to-face relationships and oral traditions) would survive while the rest swiftly perish. Of course, there are problems even with this scenario.

"I have been cursed at a Chinese border. In Dubai, my passport was studied by three veiled women for over an hour and my suitcase completely dismembered. In the Philippines I had to bribe someone in order to get my visa extended for a few days. Borders, they can be tough, especially in countries known for corruption.

But never, ever, will I return to the United States of America."

- Excerpt from a must read article by Niels Gerson Lohman

The global scramble for Africa's estimated 25 billion barrels of oil is on. Those scrambling to secure (and/or exploit) the continent's abundance of fossil fuels include each oil-rich nation's political and economic Elites, international oil corporations, regional powers, trading blocs and the four major (and energy-hungry) economic players: the E.U., the U.S., Japan and China. But, Oil-rich nations are bedeviled by the Resource Curse...

• Top China Banks Triple Debt Write-Offs as Defaults Loom (BBG)
• PBOC suspends open market operations again (Global Times)
• Eurozone bank shares fall after ECB outlines health check plan (FT)
• O-Care falling behind (The Hill)
• Key House Republican presses tech companies on Obamacare glitches (Reuters)
• J.P. Morgan Faces Another Potential Huge Payouta (WSJ)
• Yankees Among 10 MLB Teams Valued at More Than $1 Billion (BBG)
• Free our reporter, begs newspaper as China cracks down on journalists (Reuters)
• Peugeot Reviews Cost-Saving Alliance With GM (WSJ)