Florida

Corporations may or may not be people, but money has always talked, and the wealthy certainly do have a lot of excess cash lying around which they would rather prefer spending in hopes of generating the highest IRR possible by influencing the outcome of the presidential race. Below is a look of the uber-rich who have contributed at least $1 million to the major PACs as disclosed to the Federal Election Commission.

• U.S drought wilts crops as officials pray for rain (Reuters)
• Obama backs aid for drought farmers (FT)
• Greek leaders identify two-thirds of spending cuts (FT)
• Central bankers eyeing whether Libor needs scrapping (Reuters)
• Markets Face a Life Sentence of Hard Libor (WSJ)
• World Bank chief warns no region immune to Europe crisis (Reuters)
• China big four banks' new loans double in early July (Reuters)
• Nokia Loss Widens as Smartphone Sales Slump (WSJ)
• Bundesbank Expected To Buy Australian Dollars In 3Q (WSJ)

The second Barclays announced its $450 million Libor settlement, it was all over - the lawyers smelled not only blood, but what may be the biggest plaintiff feeding frenzy of all time. Which is why it was only a matter of time: "State attorneys general are jumping into the widening scandal over whether banks tried to manipulate benchmark international lending rates, a move that could open a new front against the top global banks. A handful of state attorneys general said they are looking into whether they have jurisdiction over the banks, and are starting preliminary discussions to determine what kind of impact the conduct involving the Libor rate may have had in their states."

California's budget deficit may be $16 billion (up from $9 billion in January), the state's cities may be keeling over and filing for bankruptcy left and right (Stockton and Mammoth Lakes), and overall container traffic at the Port of Long Beach may have dropped 7.2% in May compared to last year, but at least California is about to get its own monorail. Well, maybe not monorail, but certainly a high speed line between Los Angeles and San Francisco for the low, low price of at least $4.5 billion in debt to start (and much, much more to actually end). The winners: Keynesians and labor groups. The losers: anyone who has ever taken math for idiots. From USA Today: "California lawmakers approved billions of dollars Friday in construction financing for the initial segment of what would be the nation's first dedicated high-speed rail line connecting Los Angeles and San Francisco. The state Senate voted 21-16 on a party-line vote after intense lobbying by Gov. Jerry Brown, Democratic leaders and labor groups." And while nobody really expects the train to actually be built, here is the real reason for passing the legislation: "The bill authorizes the state to begin selling $4.5 billion in voter-approved bonds that includes $2.6 billion to build an initial 130-mile (210-kilometer) stretch of the high-speed rail line in the Central Valley. That will allow the state to collect another $3.2 billion in federal funding that could have been rescinded if lawmakers failed to act Friday." In summary, just passing the bill, gives California a $3.2 billion federal bailout while the actual use of funds may or may not ever appear (or money is on the latter). If still confused think Greece and Germany, because Federal tax collections were just used to give California a very fungible cash injection. Where the money ends up now is anyone's guess.

Here we go:

• OBAMA'S HEALTH-CARE OVERHAUL UPHELD BY U.S. SUPREME COURT
• 5-4 decisions, with Roberts joining the court's liberals.
• Court says federal government can’t threaten to withhold money from states that don’t fully comply on Medicaid extension
  
• CHIEF JUSTICE ROBERTS SAYS MANDATE IS NOT A VALID EXERCISE OF CONGRESS' POWER UNDER COMMERCE CLAUSE AND NECESSARY AND PROPER CLAUSE
• HEALTH LAW'S MEDICAID EXPANSION LIMITED BY U.S. SUPREME COURT -RTRS
• ROBERTS, JOINED BY TWO JUSTICES, SAYS MEDICAID EXPANSION VIOLATES CONSTITUTION -RTRS
• FOUR JUSTICES DISSENT, SAYING THE PATIENT PROTECTION AND AFFORDABLE CARE ACT GOES BEYOND -RTRSCONGRESSIONAL POWERS UNDER CONSTITUTION -RTRS
• ScotusBlog conclusion: So the mandate is constitutional
• The bottom line: the entire ACA is upheld, with the exception that the federal government's power to terminate states' Medicaid funds is narrowly read
• The ACA is upheld as a tax, not a penalty

European equities are seen modestly higher at the midpoint of the European session, with the utilities and financials sectors leading the way higher. As such, the Bund is seen lower by around 40 ticks at the North American crossover. The closely-watched Spanish 10-yr government bond yield is seen lower on the day, trading at 6.85% last, as such, the spread between the peripheral 10-yr yields and their German counterpart has been seen tighter throughout the European morning. Issuance of 6-month bills from the Italian treasury passed by smoothly, selling EUR 9bln with a higher yield, but not an increase comparable with yesterday’s auction from the Spanish treasury. The decent selling from Italy today may pave the way for tomorrow’s issuance of 5- and 10-year bonds, which will be closely watched across the asset classes. Data of note has come from Germany, with the state CPIs coming in slightly higher than the previous readings, proving supportive for the expectation of national CPI to come in flat at 0.0% over the last month.

The solution to centralized power can be summarized as the three Ds: diffusion, decentralization, and devolution of power to local communities.  The concentration of power into the hands of a few bureaucrats in Europe has failed, just as concentrating monetary power into the (privately owned) hands of Federal Reserve bureaucrats has failed. Enabled by a captured Central State, financial power has become concentrated in five banks, media control has been concentrated into six corporations, and so on, ad nauseum. Concentrating centralized political power inevitably spawns State/private-capital cartels that stripmine taxpayer/citizens. This cannot be avoided or staved off with 1,000-page legislative bills and 30,000 pages of regulations, all of which serve to consolidate the power of centralized government and private capital.

All you need to read.

And I thought the Florida Bar said foreclosure lawyers must report fraud to court...

The housing market is sending mixed signals in 2012.

At François Hollande’s “growth” policies, Greece, the ECB, the Fed, Paul Krugman....

PIMCO vs GARY SHILLING - ROUND 1

Because Banning Propaganda “Ties the Hands of America’s Diplomatic Officials, Military, and Others by Inhibiting Our Ability to Effectively Communicate In a Credible Way”

When Mr. Market ultimately becomes disenchanted with the fiscal excesses of the sovereign deadbeats, he can express his ire most energetically. When the current bond bubble here in the US ultimately bursts, as it must, it's going to be a bloodbath.  Of course, there is much, much more at stake to coming to the correct answer on the recovery, or lack thereof, than that. For instance, poor economies make for poor reelection odds for political incumbents. And when it comes to maintaining a civil society, the lack of jobs inherent in poor economies often leads to a breakdown in civility. On that note, overall unemployment in Spain is now running at depression levels of almost 25%, and youth unemployment at close to 50%. How long do you think it will be before the citizens of this prominent member of the PIIGS will refuse being led to the slaughter and start taking out their anger on the swine (governmental and private) seen as bearing some responsibility for the malaise? Meanwhile, back here in the United States, the commander-in-chief is striding around the deck of the ship of state trying to look like the right man for the job in the upcoming election, despite the gaping hole of unemployment just under the economic water line. His future prospects are very much entangled with this question of recovery.

So, what's it going to be? Recovery… no recovery… or worse, maybe even a crash?

Something funny happened in the aftermath of the US fraudclosure settlement, in which millions of backlogged housing units were supposed to enter the foreclosure process and begin the clearing of the nearly 9 million housing units in shadow inventory: nothing. Because as RealtyTrac disclosed overnight, in April the US saw a mere 188,780 foreclosures events of various type (NOD, auction, REO) take place. Why is this number significant? Because it is the lowest in 5 years, despite shadow inventory in the US now being virtually the highest ever. But, but, "this is precisely what the foreclosure settlement was supposed to prevent" one may ask... That would be correct. Next question. In other words, not only did banks get away scott free from being litigated to the 7th circle of hell, but for them the "profitable" business model continues to be one where house lending is largely irrelevant. And why not: with NIMs are record lows, banks couldn't care less if the houses and marked down loans against them in the asset pool go up or down. The real money is made elsewhere: like hedging the IG9. In the meantime for everyone else hoping to get a true clearing price on housing and millions in units in shadow inventory being finally absorbed by the market: good luck. Not only has the foreclosure process in America ground to a complete halt but as the second chart below shows, the time to liquidation once a property enters 60 day-delinquent status just hit an all time high: that's right, the average time during which a deadbeat can occupy a home without payment if they so choose is 31 months. Thank you central planning politburo and USSA.