Corruption

• Lew warns Congress to strike debt ceiling deal (FT)
• Central-Bank Moves Blur the View (WSJ)
• Brazil, Indonesia launch measures to shore up their currencies (FT)
• More mainstream media reminded about Fukushima - Radioactive ground water under Fukushima nears sea (AP)
• Fukushima inspectors 'careless', Japan agency says, as nuclear crisis grows (Reuters)
• New York Banker Arrested on Rape Charges in East Hampton (NYT)
• This time they mean business, for real: CFTC Moves to Rein In High-Speed Traders (WSJ)
• Britain operates secret monitoring station in Middle East (Reuters)
• Moody’s considers downgrading top US banks (FT)
• China's Bo calls wife mad after she testifies against him (Reuters)
• JPMorgan Sub-New Normal Growth Seen Vexing Next Fed Chief (BBG)
• SEC calls for cooling-off period for more staff (Reuters)

The war against privacy is ultimately being fought to make sure you don't keep anything hidden when the global government funding crises comes to a head.

• SURPRISE - Goldman Sachs won a preliminary victory to limit losses from a wave of erroneous trades that roiled U.S. options markets (WSJ)
• HP’s Whitman abandons 2014 revenue growth target (FT) - just keep doing those buybacks and ignore CapEx: revenue growth estimated in 2022
• Republicans in Echo Before Big Burn Defy Affordable Care (BBG)
• China's banks to take next step in rate reform push  (Reuters)
• Berlin’s Consistency on Greece’s Rescue (FT) and lack thereof
• Summers as Obama Voice of Authority Rides Car Rescue in Fed Race (BBG)
• Cuomo in Manure Fight as New York Promotes Yogurt (BBG)
• Yellen’s Ties From London to Shanghai Bypass White House (BBG)
• Sanctions Gap Allows China to Import Iranian Oil (WSJ)

When the rumor first hit two day ago that Egyptian president Hosni Mubarak would be released from prison by the new administration, many were incredulous: would Egypt truly risk such a vicious slap in the face of US foreign policy which so carefully orchestrated his ouster during the Arab spring of 2011? The answer is yes: moments ago an Egyptian court ordered the release of the deposed president saying there were no legal ground to hold the 85-year-old under allegations of corruption, which as the WSJ reports, ushers in "yet another potential flash point of anger in a country already reeling from unprecedented political violence." Which, by the way, is just what the deficit spending-starved USA wants.

The man whom the Muslim Brotherhood deposed with the assistance of the CIA following the first Egyptian coup in 2011 - former Egyptian president Hosni Mubarak - is about to be return to the public scene, and perhaps to power (as we predicted in March 2011 in a tried and true Thermidorian Reaction fashion) now that the Muslim Brotherhood itself has been overthrown in the recent countercoup. And with his return, US foreign policy sinks even more than previously thought possible. Reuters reports: "More than a year on, the only legal grounds for Mubarak's continued detention rest on another corruption case which his lawyer, Fareed el-Deeb, said would be settled swiftly. "All we have left is a simple administrative procedure that should take no more than 48 hours. He should be freed by the end of the week," Deeb told Reuters." In other news, John Kerry is preparing to stick foot even further in mouth any minute now.

Who is Mike Grunwald? Why should we care?

For the past five years Greece, stuck in its worst depression in history with two-thirds of work eligible youths unemployed, has been actively blaming all of its problems on "(f)auxterity" even as we said all along that the Greek problems have nothing to do with how much money its government spends and everything to do with corrupt, complicit and frequently criminal politicians. Today we got the latest confirmation that we were correct after the Greek finance minister Stournaras asked for the resignation of the Greek privatisation agency chief, Stavridis, following a newspaper report that he traveled on the private plane of a businessman who just bought a state company with Stavridis' blessings.

Obama must be fuming like a pile of something in the pristine Oval Office today as he hears of the latest Edward-Snowden revelations.

• This won't end well: Islamists call Cairo protest march as Egypt death toll mounts (Reuters)
• JPMorgan Said to Expect Multiple Fines for Whale Loss (BBG)
• Ex-bosses at JPMorgan unlikely to face charges in 'Whale' scandal (Reuters)
• China could target oil firms, telecoms, banks in price probes (Reuters)
• For once, it's not the weather's fault: U.K. Retail Sales Increase More Than Forecast on Heatwave (BBG)
• Japanese visits to shrine on war anniversary anger China (Reuters)
• India Fighting Worst Crisis Since ’91 Seeks to Buoy Rupee (BBG)
• Japan Signals Corporate Tax Cut a Long Shot as Deflation Eases (Reuters)
• Indonesia Tackles Graft in Energy Sector (Reuters)
• Merkel Touts Strength of German Economy (WSJ)
• and... British stuntman who parachuted into London Olympics opening ceremony as James Bond dies in fall (AP)

A question arises: how does one know they are living in an unmitigated disaster of a banana republic where not even an attempt at hiding the crime and corruption takes place? Well, we are not absolutely certain, but we have a distinct feeling that when the president appoints as his impartial "reviewer" of the ultra top secret NSA's policies and capabilities the one man who was caught and exposed and subsequently apologized for lying to Congress, that may be a pretty damn good sign. Sadly, that is precisely what just happened.

No one can predict accurately at what point slower growth will start producing political turmoil on a scale that’s unprecedented in the China that Deng made, what the magic number is, or even whether there’s an iron connection between economic and political crises. Yet the increase in capital flight from China and soaring applications for American and European residential visas by well-heeled Chinese suggest that the elite is hedging its bets. Some may be overstating things, but the rebalancing camp is too sanguine.This much is certain: China’s leaders are in uncharted waters, and because of the diminishing utility of the established formula for rapid growth their maps may be of questionable value.

• 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.