FBI

The best performing currency year-to-date has no home country, no central banker and no physical scrip; it is the online-only ‘Bitcoin’ and as we noted recently, it is becoming more mainstream.  BTC, as the currency is known, up 130% year to date in dollar terms, thanks to rising demand from a wide variety of adherents, which ConvergEx's Nick Colas notes, includes libertarian activists, small businesses, online drug dealers and gambling sites.  That makes the Bitcoin a controversial subject, to be sure, but Nick notes we can also learn from this unique case study a lesson in global economics.  Bitcoin ‘Money supply’ growth is capped at a slow rate – far below its current levels of demand.  That makes it prone to boom-bust cycles.  It also has no sovereign sponsorship, which means it works outside any nation’s security apparatus.  Lose your bitcoins to hackers?  Tough luck – there is no FDIC in these parts.  Still, Colas concludes, in the creation and growth of the Bitcoin it is not hard to see the online future of currency, especially as real-world alternatives continue to struggle with sluggish economies.

• Grillo kills move to break Italy deadlock (FT)
• Abe nominates Kuroda to run BoJ (FT)
• More WMT bad news: Wal-Mart Chief Administrative Officer Mars to Leave: WSJ (BBG)
• Japan's Abe: Islands Are Indisputably Ours (WSJ) - Except for China of course
• Low-key departure as pope steps down, to enter the final phase of his life "hidden from the world" (Reuters)
• Cuts unlikely to deliver promised budget savings (Reuters)
• European Union caps bankers’ bonuses (FT)
• White House, Republicans dig in ahead of budget talks (Reuters)
• Jockeying Stalls Deal on Cuts (WSJ)
• Argentina Says It Won’t Voluntarily Comply With Bond Ruling (BBG)
• Italian president says forming new government cannot be rushed (Reuters) - or happen at all
• Central Banks Spewing Cash Must Plan Exit Timing, Rohde Says (BBG)
• China Regional Targets Cut in Sign Debt Concerns Heeded (BBG)
• RBA Says Up to 34 Central Banks Holding Australian Dollars (BBG)

Is the U.S. economy about to experience a major downturn?  Unfortunately, there are a whole bunch of signs that economic activity in the United States is really slowing down right now. In many ways, what we are going through right now feels very similar to 2008 before the crash happened.  Back then the warning signs of economic trouble were very obvious, but our politicians and the mainstream media insisted that everything was just fine, and the stock market was very much detached from reality.  When the stock market did finally catch up with reality, it happened very, very rapidly.  Sadly, most people do not appear to have learned any lessons from the crisis of 2008.  Americans continue to rack up staggering amounts of debt, and Wall Street is more reckless than ever.  As a society, we seem to have concluded that 2008 was just a temporary malfunction rather than an indication that our entire system was fundamentally flawed.  In the end, we will pay a great price for our overconfidence and our recklessness.

With the entire world, and certainly GETCO's ES and EURUSD algos, focused on every single update out of the Italian Senate race, which now appears certain to not bring the necessary 158 seats to the Bersani-Monti coalition leading to a chaotic revote in the coming months, here is some tangential news of the "who could have ever seen this coming variety." Following last week's Heinz insider trading probe, which implicated a Goldman Sachs account in Zurich belonging to some private wealth client, who was so anonymous not even Goldman knows who it belonged to, we now learn that yet another Goldman employee has just left the company in a totally separate insider trading probe.

Everyone Knew Iraq Had No WMDS … and Was Not Behind Anthrax Attacks or 9/11

• Office Depot Agrees to Buy Officemax for $13.50/Shr in Stock
• Bulgarian Government Resigns Amid Protests (WSJ)
• Rome will burn, regardless of Italian election result (Reuters)
• Abe Says No Need for Foreign Bond Buys Under New BOJ Chief (BBG)
• Rhetoric Turns Harsh as Budget Cuts Loom (WSJ)
• Muddy Waters Secret China Weapon Is on SEC Website (BBG)
• Business Loans Flood the Market (WSJ)
• Staples May Be Winner in Office Depot-OfficeMax Merger (BBG)
• Fortescue Won't Pay Dividend, Profit Falls (WSJ)
• Key Euribor rate on hold after rate cut talk tempered (Reuters)
• FBI Probes Trading in Heinz Options  (WSJ)
• Spain Said to Impose Yield Ceiling on Bond Sales by Regions (BBG)
• BOK’s Kim Signals No Rate Cut Needed Now as Outlook Improves (BBG)

• Pope steps down, citing frailty (Reuters)
• Japan’s economic minister wants Nikkei to surge 17% to 13,000 by March (Japan Times)
• Venezuelan devaluation sparks panic (FT)
• Rajoy releases tax returns, but fails to clear up doubts over Aznar years (El Pais)
• Companies Fret Over Uncertain Outlook (WSJ)
• Home Depot Dumps BlackBerry for iPhone (ATD)
• Kuroda favors Abe's inflation target, mum about BOJ role (Kyodo)
• A Cliff Congress May Go Over (WSJ)
• U.S., Europe Seek to Cool Currency Jitters (WSJ)
• Radical rescue proposed for Cyprus (FT)
• Franc Is Still Overvalued, SNB’s Zurbruegg Tells Aargauer (BBG)
• Northeast Crawls Back to Life After Crippling Blizzard (WSJ)

Government Prosecutes and Harasses those Who Expose Criminal Wrongdoing

Kangaroo Court Show Trials and Blatant Obstruction of Justice

Anyone who spends any amount of time on the internet has seen them. They are the moonbats, the wingnuts, the whackjobs, the Conspiratorialists. They are America’s new Lunatic Fringe, and their numbers are growing. To the uninitiated this all seems rather humorous, albeit slightly unsettling.  It would be both wrong and unwise just to slough it off as the ramblings of the insane.  The reason such beliefs are gaining favor is because many Americans have lost faith and lost trust in the government and in America’s elected leadership.  Given what has happened over the last decade, this is not only understandable, it is even, in an odd way, reasonable.  A continual drift to the fringe can be expected because of the many very real things that make the foolish things suddenly more believable. The American people are well aware they have been lied to by the leadership. They know that a lobbyist has an infinitely greater chance of getting his way than an entire nation of voters. When trust is gone, everything becomes an affront, a conspiracy, a power grab by the elite. 

Nearly two years ago, the hacktivist group Anonymous made waves around the fringes of financial media by announcing "Operation Empire State Rebelion" whose goal was to "engage in a relentless campaign of non-violent, peaceful, civil disobedience until Ben Bernanke steps down and the Primary Dealers within the Federal Reserve banking system be broken up and held accountable for rigging markets and destroying the global economy effective immediately." Needless to say nothing came out of it, and OperationESR was promptly forgotten as Anonymous had apparently met its match in the face of the Fed and the Primary Dealers. Now, in the aftermath of the Aaron Swartz suicide which has put the entire hacking community on high alert, Anonymous is back with yet another campaign, this one titled "Operation Last Resort", which was revealed to the public when Anonymous took control of the website for the the US Sentencing Commission for nearly one full day from Friday afternoon until Saturday evening, using it as a venue from which to distribute a massive 1.3 GB encrypted file titled Warhead-US-DOJ-LEA-2013.AES256 which may contain secret information sourced from the Department of Justice (hence the files contained are named after SCOTUS justices) and which Anonymous threatens to release unless massive reforms take place at the DOJ - reforms which will certainly never see the light of day, meaning Anonymous will have no choice but to make the contents of said file public.

The Great Recession had one effect on Americans you don’t hear much about - regular illicit drug use increased by approximately 2.5 million users in 36 months, from 2007 to 2010.  The year 2011 (the most recent data available) saw a slight decline to an estimated 8.7% (from 8.9%) of all Americans regularly using illegal drugs, but, as ConvergEx's Nick Colas notes, this is still 19.5 million people who would find it difficult to pass a pre-employment drug test.  Drug use and testing does not (of course) explain the still high levels of national unemployment on their own.  Issues of cyclical sluggishness and select structural issues still hold the reins here.  But as policymakers struggle to keep the country’s unemployment rate on a downward trajectory, it does seem clear that national drug policy and state-level lawmaking are working at cross-purposes.  With drug use among the unemployed at levels double their full-time employed peers (17% versus 8%), and marijuana use on a solid uptrend, national drug policy and macroeconomic priorities appear to be on different – and conflicting – tracks.

The Winners of the Academy Award and Golden Globe Are ... Government Propagandists

In part one of this two part series – Hey You – we examined how an invisible government of wealthy, power hungry men have utilized the propaganda techniques of Edward Bernays and lured the American people into a narcissistic, techno-gadget, debt based servitude. Over the last one hundred years they have created a totalitarian state built upon egotism, material goods, and fulfilling our desires through Wall Street peddled debt and mass consumerism. It has been an incredibly effective form of control that has convinced the masses to love their servitude. The lyrics to Pink Floyd's 'Mother' had both a literal and figurative meaning for Roger Waters. Having seen his Wall Tour performance this past summer at Citizens Bank Park with a diverse crowd of 40,000, ranging in age from senior citizens to teenagers, it seems this song has gained new meaning. He sang a duet with himself from 1980 projected on the Wall and when he sang the lyric, “Mother, should I trust the government?” the entire stadium responded in unison – NO!!! This revealed a truth that is not permitted to be discussed by the corporate mainstream media acting as a mouthpiece for the ruling class. A growing legion of citizens in this country does not trust the government. This is very perceptive on their part.

A Fiscal Cliff "deal" that reduces GDP and squeezes the consumers; a Fed whose policies have forced massive capital misallocation away from growth investment and are leading to an unprecedented corporate "revenue cliff"; and now, in the aftermath of the government response to the Newtown massacre which threatened to curb the second amendment, we get this via Reuters:

• BACKGROUND CHECKS FOR US GUN SALES REACHED RECORD IN DECEMBER AT 2.8 MLN CHECKS - FBI

Because when everything is an unintended consequence, nobody has to take any responsibility for anything. And so the New Normal marches on.