Department of Justice

Of all the awful tensions roiling and coiling in American society, it’s only a little bit surprising that the racial module is blowing off now rather than, say, the stock market. Perhaps it’s a seasonal thing: race riots in the summer; stock market crashes in the fall, revolutions in the spring.

Now that everyone is finally focusing on the strategy of bloating any available company with massive leverage in order to use the proceeds to either buyback stock or engage in "synergy-creating" M&A (leading to countless pink slips), which is affectionately known as "activism", here is Bill Ackman's latest, Q2, letter with his take on this topic of how massive leverage which is great for shareholders now, but a disaster waiting to happen for employees and bondholders in the future as soon as rates rise, is the greatest thing since sliced bread.

U.S. Has Lost the Immune System Created by the Founding Fathers

Last week's first ever U.S.-Africa summit was a perfect mix of dinner-party diplomacy with some of the world’s most violent and homophobic dictators. As the Daily Mail points out, President Obama had no problem smiling and hobnobbing with a cornucopia of murders and human rights abusers. Just remember this the next time a politician tries to get you enraged about a human rights abuse somewhere. There is always an ulterior motive, because without question, the U.S. only cares about human rights when it is geopolitically or economically advantageous to do so.

• Pope Francis calls for action as Iraqi Christians forced to flee (Reuters)
• Richest Russians Deprived of Luxury Foods by Putin’s Ban (BBG)
• Exxon Drilling Russian Arctic Shows Sanction Lack Bite (BBG)
• Israeli Jets Strike Gaza Targets After Rockets Shatter Truce (BBG)
• U.S. starts aid airdrops in Iraq but no strikes yet (Reuters)
• Banks Said to Be Arranging Argentine Debt Buyer Group (BBG)
• Siberia Flight-Ban Threat Forces Airlines to Mull Options (BBG)
• Malaysia Airlines to Be Delisted in $429 Million Buyout (BBG)
• Erdogan poised to win Turkey's first popular presidential vote (Reuters)
• African Bank Fights Collapse in Espirito Santo-Like Drama (BBG)
• China to build lighthouses on five isles in defiance of U.S. call (Reuters)

The gold price manipulation scheme will go down as the biggest financial market scandal in US history for numerous reasons. They include the destruction of the free market system in the United States.

America Used COMMUNIST Torture Techniques SPECIALLY DESIGNED to Produce F·A·L·S·E Confessions

The issue of impeachment is now no longer whispered about. Talk is prevalent and a recent poll indicated that 35% of the public believe the president should be impeached. Interestingly, the topic is being promoted more by Democrats than Republicans. Democrats don’t truly believe the President should be impeached, but they see it as a chance, likely their only chance, to bolster their election possibilities this November.

Since we first exposed to the world that yet another market (foreign exchange) was manipulated by nefarious traders over a year ago, the grand total of prosecutions for market rigging is... zero. As Bloomberg notes, however, more than 25 FX traders have been fired, suspended, or put on leave in that same period. While regulators appear incapable of discovering the truth, the market manipulation probes just got serious..."The [UK] Serious Fraud Office has today opened a criminal investigation into allegations of fraudulent conduct in the foreign exchange market."

• Ukraine Says Malaysian Airliner Shot Down Near Russian Border (BBG)
• Downing of airliner seen as pivotal moment in Ukraine crisis (Reuters)
• Malaysian Air Flight Took Route Avoided by Qantas, Asiana (BBG)
• Russian-Made Missile Hit Malaysia Jet, U.S. Officials Say (BBG)
• Netanyahu Orders Military to Ready Wider Gaza Incursion (BBG)
• Silvio Berlusconi Underage Sex Conviction Overturned (WSJ)
• But... but... "economic patriotism" - AbbVie to Buy Shire for $54.8 Billion as Drug Deals Surge (BBG)
• SEC targets 10 firms in high frequency trading probe - SEC document (Reuters)
• Art bubble pop: Sotheby's to Lay Off 'Modest' Number of Employees (WSJ)
• Moar Abenomics: Hermes Sales Trail Estimates as Japanese Revenue Declines (BBG)

Back in the summer of 2011 during the debt ceiling debacle, S&P did the unthinkable: it dared to speak the truth when it downgraded the US from its pristine AAA rating, setting off a stock market selloff and paradoxically sending bonds to record low yields. This resulted in a vindictive Tim Geithner promptly warning the Chairman of McGraw-Hill the US would retaliate (which it did), the termination of then CEO Devan Sharma (and his replacement with the all too friendly COO of Citibank), and most importantly, a still ongoing legal fight in which the DOJ sued S&P (and only S&P, not Moody's, not Fitch) allegedly for rating improprieties during the first housing bubble, but even 5 year olds knew it was just to teach S&P a lesson. Today we learn just what the cost is for anyone who dares to downgrade the US. The answer: $1,000,000,000. That is the amount that S&P has decided it will agree to pay in a settlement with the DOJ to put all this "truthiness" unpleasantness behind it.

• Secret Path Revealed for Chinese Billions Overseas (BBG)
• Traders Flood U.S. With $3.4 Trillion of Bond-Auction Demand (BBG)
• Just in time to cover bad earnings in a massive $3.8 billion "one-time charge": Citi says to pay $7 billion to settle securities investigation (Reuters)
• Troubled Epirito Santo family loosens grip on Portugal's BES (Reuters)
• BES puts in place new executives after central bank push (Reuters)
• Bank of China-CCTV drama may reveal power struggle in Beijing (SCMP)
• Portugal speeds up Banco Espírito Santo management changes (FT)
• Dark pool probe builds pressure on Barclays boss (Reuters)
• Russia Vows to Respond After Shelling From Ukraine (BBG)
• Ukraine forces end rebel airport blockade (Reuters)
• Obama Contends With Arc of Instability Unseen Since '70s (WSJ)

In another indication that the ongoing FX probe is picking up steam, or at least preparing for primetime public PR consumption, the FT reports that US prosecutors are offering immunity deals to junior traders in London. The quo for this quid: rat our the senior staff involved in what has previously been reported to be years of currency manipulation (recall "How Wall Street Manipulates Everything: The Infographics"). And continuing the tradition of the DOJ only focusing on European banks, because apparently nobody in the US ever engaged in manipulation of anything, ever, the "US Department of Justice staff have flown to the UK in recent weeks to interview foreign exchange traders, who have been offered partial immunity in exchange for volunteering information about superiors, people familiar with the situation said."

If We Don't Learn Our History, We're Doomed to  ... "KaBoom!"

The dollar's demise has been often foretold.  The euro, SDRs, the yuan, Bitcoins all were going to be viable alternatives.  The dollar persists.