Corruption

Sovereign debt is the bonds that are issued by national governments in foreign currencies with the intent to finance a country’s growth. The risk involved is determined by whether that country is a developed or a developing country, whether that country has a stable government or not and the sovereign-credit ratings that are attributed by agencies to that country’s economy.

While anti-depressant use is surging in Sweden (up 1000% since 1980), bursting in Britain (up 495% since 1991), and up an astounding 400% since 1994 in the USA (with 1 in 10 on some kind of 'prozac'), it is the poor-old Nigerians that should really be complaining. Based on seven variables, Bloomberg has scored 74 nations around the world for their "stressed-out" factor and finds the USA to be 54th (so stop whining and suck it up), Norway the least stressed-out of all and El Salvador and South Africa at the top with Nigeria (with the roiling Egyptians ranking 15th).

At first, it was just GlaxoSmithKline, which “confessed” to having paid bribes in China, including “sexual bribes.” Now more drugmakers are on the hot seat.

“There is no cure for high prices, like high prices.” This is why the Middle East can never truly have a prolonged supply shortage. They will price their customers out of the market!

Fear not US: with a Q2 GDP of under 1% now all but assured, and with all economic data reporting now a global bizarro day farce, you will have a chance to take the torch from Europe in the ugliest girl category, and push the S&P to a new record intraday high today following what should be assured epic misses in the Industrial Production print (exp. +0.3%), Cap Utilization and the NAHB housing market index which is set to tumble now that any retail demand for housing was promptly killed following the recent spike in rates. In addition to a relatively lite economic docket, we get the all systematically important hedge fund, Goldman Sachs, reporting which is expected to announce a 21% q/q drop in revenues, led by lower gains in Investment Lending (i.e. prop), offset by 12% drop in operating expenses. Of course, nothing fundamental actually matters as markets continue to be on ultra low-volume, "drift higher" autopilot until tomorrow's Ben Bernanke semi-annual muppet show  in Congress, when he is expected to refill the hopium trough once more and finally send the S&P above 1700 on central planning.

In an effort to soften the blow to our American readers, here is an analogy: You know when you move out of your parents’ house and live on your own, how you start hanging out with your friends’ families and you realize that actually, your family was a little screwed up? Stuff you always assumed was normal your entire childhood, it turns out was pretty weird and may have actually screwed you up a little bit. The point is we don’t really get perspective on what’s close to us until we spend time away from it. Just like you didn’t realize the weird quirks and nuances of your family until you left and spent time with others, the same is true for country and culture. You often don’t see what’s messed up about your country and culture until you step outside of it. And to our foreign readers, get your necks ready, because this is going to be a nod-a-thon.

Dispassionate review of some of next weeks important developments.

In the years 2006 and 2007, the underlying stability of the global economy and the U.S. credit base in particular was experiencing intense scrutiny by alternative economic analysts. A crash was coming, it was coming soon, and most of our society was either too stupid to recognize the problem or too frightened to accept the reality they knew was just over the horizon. Why did 2008 creep up on so many people? Weren’t there plenty of economists out there “preaching to the choir” at that time? Weren’t there plenty of signals? Weren’t there plenty of practical conclusions being made about the future? And yet, the world was left stunned. The truth is, human beings have a nasty habit of ignoring the cold hard facts of the present in the hopes of using apathy as a magical elixir for future prosperity. They want to believe that disaster is a mindset, that it is a boogeyman under their bed that can be defeated through blind optimism. Collapse, from a historical perspective, seems to occur when the searchlights of the individual mind are dimmest, when the threat is the greatest, and when we are most comfortable in our ignorance.

When Bloomberg blasts headlines like this: S&P FUTURES UP 1PT, AT SESSION HIGH, ERASE EARLIER 3.4PT DROP,  you know Bernanke hasn't spoken in over 24 hours if a 4 point swing is headline worthy. That said, the exhausted S&P ramp is now going for the 6th consecutive session as all the losses since the June FOMC meeting have now been erased, the S&P is making constant all time highs, and seemingly the Fed's message on tapering and communication has been clarified. The message being that the Fed is tapering its monthly purchases but short-term rates aren't being lifted. Sadly, the market's first reaction was the right one but the herd of cats has once again been herded by the trading desk at Liberty 33.

Snowden Is a Traitor to the Political Elite … But a Hero to the American People

• Bernanke Supports Continuing Stimulus Amid Debate Over QE (BBG)
• Portugal president wants 'salvation' deal, including opposition (Reuters)
• Egypt has less than two months imported wheat left - ex-minister (Reuters)
• A rise in long-term interest rates is creating challenges and opportunities for the largest U.S. banks. (WSJ)
• BoJ says Japanese economy is ‘recovering’ (FT)
• More Chinese cities likely to curb auto sales (Reuters)
• PC Shipments Fall for 5th Quarter (BBG)
• Property Crushes Hedge Funds in Alternative Markets (BBG)
• New aid gives Greece summer respite before showdown (Reuters)
• Rajoy Punishes Exporters Sustaining Spain’s Economy (BBG)

According to a recent report in the FT, the former treasurer of Spain's ruling Popular Party, Luis Bárcenas, has claimed in an interview that the party has been in breach of Spain's campaign finance laws for a minimum of 20 years. Presumably he was moved to talk because he was the one who got caught and is expected to fall on his sword. Now that he is facing a lengthy prison sentence, he no longer has a reason to clam up. Incidentally, no-one in Spain was surprised to learn what he had to say. What we are seeing here is actually a strong parallel to Greece. The EU has been complaining about the Greek government's inability to collect taxes, without considering that Greek tax payers may have very good reason to pay as little as possible to the corrupt apparatus installed by the ruling class. As a Greek shipowner told a journalist when asked why he thought it was fine that rich shipowners are tax-exempt in Greece: “Would you want to pay money to Al Capone?” Pause. “Me neither.” Finally, as the bankruptcy of the Western welfare/warfare states becomes more glaringly evident, even stronger growth of the informal economy seems likely to ensue.

"There are in that House many very wealthy men - men who think nothing of spending a week’s pay, or a dozen of them, for a dinner or a wine party when they have something to accomplish by it. Some of those same men made beautiful speeches upon the great debt of gratitude which the country owed the deceased — a debt which could not be paid by money — and the insignificance and worthlessness of money, particularly so insignificant a sum as $20,000 when weighed against the honor of the nation. Yet not one of them responded to my proposition. Money with them is nothing but trash when it is to come out of the people. But it is the one great thing for which most of them are striving, and many of them sacrifice honor, integrity, and justice to obtain it."

"So you see, Colonel, you have violated the Constitution in what I consider a vital point. It is a precedent fraught with danger to the country, for when Congress once begins to stretch its power beyond the limits of the Constitution, there is no limit to it, and no security for the people. I have no doubt you acted honestly, but that does not make it any better, except as far as you are personally concerned, and you see that I cannot vote for you."

 - Col. David 'Davy' Crockett

When Charles Ponzi was around, it took just a tad longer to rake in the cash and commit financial fraud, escaping with the proceeds to better climates. Today, the internet and the power of the virtual world have made the transfer of funds so much quicker.

A wicked web of deceit, with just a good measure of theft and forgery thrown in for old time’s sake! Most of the time when we read about history, the biggest this or the fastest that related to the stock exchange it’s (so we are told) so that we don’t make the same mistakes twice and then some bull gets spun about how we need to learn from our mistakes