Gambling

• Ukraine attacks rebel city, helicopter shot down (Reuters)
• Euro Unemployment Holds Near Record Amid Factory Gains (BBG)
• Yellen’s Fed Resigned to Diminished Growth Expectations (BBG)
• Junket Figure's Disappearance Shakes Macau's Gambling Industry (WSJ)
• China tried to undermine economic report showing its ascendancy (WSJ)
• Liquidity Trap Hitting AAA Bonds Has ATP CEO Sounding Alarm (BBG)
• AstraZeneca Snubs Pfizer Approach That U.K. Won’t Block (BBG)
• Missing Jet Recordings May Have Been 'Edited' (NBC)
• RBS turns corner as first-quarter profit trebles (Reuters)
• Japan household spending hits four-decade high, wages key to outlook (RTRS) while Real Incomes Drop 3.3% in March, 6th straight decline

Bad Government and Central Bank Policy Are the MAIN CAUSE of Runaway Inequality

So far we have experienced 7 million foreclosures. Beyond that there are still 9 million homeowners seriously underwater on their mortgages and there are millions more who are stranded in place because they don’t have enough positive equity to cover transactions costs and more stringent down payment requirements. And that’s before the next down-turn in housing prices - a development which will show-up any day. In short, the socio-economic mayhem implicit in the graph below is not the end of the line or a one-time nightmare that has subsided and is now working its way out of the system as the Kool-Aid drinkers would have you believe based on the “incoming data” conveyed in the chart. Instead, the serial bubble makers in the Eccles Building have already laid the ground-work for the next up-welling of busted mortgages, home foreclosures and the related wave of disposed families and social distress.

One of the most consistent debates emanating out of Washington in the past 6 years has been that dealing with income tax. Whether high, low, "fair" or "unfair", said discussions, however, focus solely on tax paid at the Federal level, and largely ignore that "other" key tax: state. Which is surprising, considering some states such as California demand a total contribution amounting to a third of the highest marginal Federal tax bracket, which could make some wonder if those bracing sea breezes are really worth it. But what about the other states? Here is the full breakdown of the states with the top income tax rates, those with the lowest, and all the states inbetween.

• Ukraine Says Russia Exporting ‘Terror’ Amid Eastern Push (BBG)
• Civil War Threat in Ukraine (Reuters)
• China Shoe Plant Strike Disrupts Output at Nike, Adidas Supplier (BBG)
• Mt Gox to liquidate (WSJ)
• Ex-Co-Op Bank Chairman Charged With Cocaine Possession (BBG)
• Goldman Sachs plans to jump-start stock-trading business (WSJ)
• Credit Suisse first-quarter profit falls as trading tumbles (Reuters)
• U.K. Unemployment Rate Falls to Five-Year Low (BBG)
• Lawmakers Back High-Frequency Trade Curbs in EU Markets Law (BBG)
• Yahoo's growth anemic as turnaround chugs along (Reuters)
• Spain ETF Grows as Rajoy Attracts Record U.S. Investments (BBG)

It's not Bitcoin, it's the underlying technology

There is a gloriously simple solution to all the world's TBTF problems, one that could be enacted in a HFT millisecond by pulling the trigger, so to speak. The solution comes from none other than that historic US nemesis, Vietnam, where unscrupulous financiers don't just go to jail. Sometimes, they get death row.

Just buy the book Damnit, it’s all in there.

Almost a month ago, we wrote "This Is The One Financial Product Now Targeted By The HFT Swarm", in which after briefly perusing the Virtu S-1 filing, we concluded that "one product stood out. It is highlighted on the chart below: FX."

We are happy to report that this time the mainstream media is following our reports much more closely then five years ago, because overnight none other than Bloomberg came out with "High-Frequency Traders Chase Currencies as Stock Volume Recedes" in which we read, guess what, "Forget the equity market. For high-frequency traders, the place to be is foreign exchange." But our readers already knew this of course...

One of the evils of massive over-financialization is that it enables Wall Street to scalp vast “rents” from the Main Street economy. These zero sum extractions not only bloat the paper wealth of the 1% but also fund a parasitic bubble finance infrastructure that would largely not exist in a world of free market finance and honest money. The infrastructure of bubble finance can be likened to the illegal drug cartels. In that dystopic world, the immense revenue “surplus” from the 1000-fold elevation of drug prices owing to government enforced scarcity finances a giant but uneconomic apparatus of sourcing, transportation, wholesaling, distribution, corruption, coercion, murder and mayhem that would not even exist in a free market. The latter would only need LTL trucking lines and $900 vending machines. In this context, the sprawling empire known as Bloomberg LP is the Juarez Cartel of bubble finance.

If you are not Professor Paul Krugman you probably agree that Washington has left no stone unturned on the Keynesian stimulus front since the crisis of September 2008. By the time the “taper” is over later this year (?) the Fed’s balance sheet will exceed $4.7 trillion - $4 trillion in new central bank liabilities in six years. All conjured out of thin air.  Professor Krugman proposing to “do something”... In short, Krugman wants to double-down on the lunacy we have already accomplished. Unfortunately, we are presently nigh onto “peak debt”; there is no “escape velocity” because the Fed’s credit channel is broken and done. Going forward, the American people will once again be required to live within their means, spending no more than they produce. By contrast, Professor Krugman’s destructive recipes are entirely the product of a countrafactual economic universe that does not actually exist. He wants us to borrow and print even more because our macro-economic bathtub is not yet full. And that part is true. It doesn’t even exist.

The central premise of the Keynesian Cargo Cult is that this mechanism of making it cheap and easy to borrow money will work a kind of magic that can only be manifested by dancing around a fire at night waving dead chickens and chanting "humba-humba." The Keynesian cargo Cult calls this magic "animal spirits." Unfortunately, waving dead chickens while dancing around a fire doesn't do anything in the real world, and neither does making it cheap and easy to borrow more money. You poor, dumb, deluded fools. You've destroyed our economy, our values and our ability to deal with reality. Your faith is as boundless and disconnected from the real world as your policies.

When you ponder the implications of allowing a small group of powerful wealthy unaccountable men to control the currency of a nation over the last one hundred years, you understand why our public education system sucks. The average American has experienced a fourteen year recession caused by the monetary policies of the Federal Reserve. Our leaders could have learned the lesson of two Fed induced collapses in the space of eight years and voluntarily abandoned the policies of reckless credit expansion, instead embracing policies encouraging saving, capital investment and balanced budgets. They have chosen the same cure as the disease, which will lead to crisis, catastrophe and collapse. 

Seth Klarman recently remarked:

"All the Trumans – the economists, fund managers, traders, market pundits –know at some level that the environment in which they operate is not what it seems on the surface…. But the zeitgeist is so damn pleasant, the days so resplendent, the mood so euphoric, the returns so irresistible, that no one wants it to end."

Klarman is here referring to the waning days of this third and greatest financial bubble of this century. But David Stockman's take is that the crack-up boom now nearing its dénouement marks not merely the season finale of still another Fed-induced cycle of financial asset inflation, but, in fact, portends the demise of an entire era of bubble finance.

With Chinese authorities clamping down on the shadow-banking system, taking action of their bubble-bursting reforms, and now increasing the trading bands on the Yuan (to increase volatility and hopefully unwind, in a controlled manner, the biggest and most one-sided carry trade in the world's markets), we thought it perhaps surprising that growing numbers of Chinese are using UnionPay - a state-backed bank card - to illegally funnell billion of dollars out of the country. As Reuters reports, its unclear why the PBOC has not clamped down on this as documents show they are well aware of it... and as one clerk noted "don't worry... everyone's doing it."