Gambling

• 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)

A week after the epic fail of Atlantic City's Revel casino, and in the middle of the gambling 'mecca's rebuilding, the mayor of this always-above-board city has voted himself a $16,000 per annum pay rise; why not, he is entitled, right? Well it seems Chris Christie has a few things to say about that:

*CHRISTIE BLASTS ATLANTIC CITY MAYOR FOR $16,000 PAY RAISE
*CHRISTIE SAYS A.C. GOVERNMENT `GOING DOWN THE CHUTE'
*CHRISTIE SAYS ATLANTIC CITY GOVERNMENT IS `GOD-AWFUL'

• Wal-Mart's Sales Problem—And America's (WSJ)
• Investors fret that Italy may undermine ECB backstop (Reuters)
• Monti Government Mulls Delaying Monte Paschi Bailout (BBG)
• Norway Faces Liquidity Shock in Record Redemption (BBG)
• ECB's Praet Says Accommodative Policy Could Lose Effectiveness (BBG)
• EU Chiefs Tell Italy There’s No Alternative to Austerity (BBG)
• New Spate of Acrimony in congress As Cuts Loom (WSJ)
• BOE's Tucker hints at radical growth moves (FT)
• Kuroda Seen Getting DPJ Vote for BOJ, Iwata May Be Opposed (BBG)
• Russian Banks Look to Yuan Bond Market (WSJ)
• Dagong warns about rising debt (China Daily)
• Italy Election Impasse Negative for Credit Rating, Moody’s Says (BBG)

Peak oil we can handle. We find new sources, we develop alternatives, and/or prices rise. It's all but certain that by the time we actually run out of oil, we'll already have shifted to something else. But "peak water" is a different story. There are no new sources; what we have is what we have. Absent a profound climate change that turns the evaporation/rainfall hydrologic cycle much more to our advantage, there likely isn't going to be enough to around. As the biosphere continually adds more billions of humans (the UN projects there will be another 3.5 billion people on the planet, a greater than 50% increase, by 2050 before a natural plateau really starts to dampen growth), the demand for clean water has the potential to far outstrip dwindling supplies. If that comes to pass, the result will be catastrophic. People around the world are already suffering and dying en masse from lack of access to something drinkable... and the problems look poised to get worse long before they get better.

As the markets once again approach historic highs - the overly exuberant tone, extreme complacency and weakness in the economic data, bring to mind Bob Farrell's 10 investment rules.  These rules should be a staple for any long term successful investor.  These rules are often quoted yet rarely heeded - just as they are now. Farrell became a pioneer in sentiment studies and market psychology. His 10 rules on investing stem from personal experience with dull markets, bull markets, bear markets, crashes and bubbles. In short, Farrell has seen it all and lived to tell about it. Despite endless warnings, repeated suggestions and outright recommendations - getting investors to sell, take profits and manage your portfolio risks is nearly a lost cause as long as the markets are rising.  Unfortunately, by the time the fear, desperation or panic stages are reached it is far too late to act and we will only be able to say that we warned you.

• G-20 Signals Support for Japan Easing Without Yen Talk (BBG) - but how will Mrs Watanabe know to sell the JPY without nightly proddings?
• Obama Faces Risks in Pipeline Decision (NYT)
• White House Immigration Plan Leaked (WSJ)
• Reader’s Digest Is Bankrupt as Iconic Magazine Falters (BBG)
• Venezuela's Chavez in surprise return from Cuba (Reuters)
• German Recovery Hinges on Euro Zone (WSJ)
• Hong Kong’s Bankruptcy Requests Climb to Almost Two-Year High (BBG)
• China New Year Retail Sales Growth Slows on Frugal Drive (BBG)
• Debt Bubble Born of Easy Cash Prompts Swedish Rule Review (BBG)
• In Europe's tax race, it's the base, not the rate, that counts (Reuters)
• Ugliest Danish Banks Find No Buyers in Toxic Asset Trap (Bloomberg)
• Italian Undecided Voters Targeted in Campaign’s Last Week (BBG)

Over the past couple of hundred years, the State of the Union has been enjoyed by pamphlet, radio, TV, and webcast and each and every year, the citizenry has sat avidly awaiting their 'word' to come up on SOTU Bingo or for the bets they made on the average length to be confirmed. As WaPo notes, the average minutes spent on the address has grown from a mere 36:53 under President Jimmy Carter up to 1 hour and 5 minutes under the current president. From comparisons of various word frequencies (e.g. tax vs cut or job vs hope) to the ultimate SOTU Drinking Game, and from an 51/53 minute over/under to the color of Obama's tie, below is everything you need to know about SOTU but were absolutely embarrassed to ask...

By bailing out banks and targeting equity prices, the central banks are exacerbating the misallocation of savings/financial capital to historically overvalued corporate equity. What happens when central banks make credit cheap and abundant? All that cheap money chases scarce productive assets. The yields on assets drop, and speculative "risk-on" assets are boosted into bubbles. Even as corporate profits have skyrocketed (does the trajectory look sustainable? up almost 300% in four years?), equity valuations have risen apace, keeping yields at historically low levels. Anyone who claims "stocks are cheap" would do well to study these charts...

Some interesting footnotes in a CBO report.

• Euro Tremors Risk Market Respite on Spain-Italy, Banks (Bloomberg)
• Obama Says U.S. Needs Revenue Along With Spending Cuts (Bloomberg) 
• China Regulators Moved to Restrain Lending (WSJ)
• Low Rates Force Companies to Pour Cash Into Pensions (WSJ)
• JAL wants to discuss 787 grounding compensation with Boeing (Reuters)
• Abe Shortens List for BOJ Chief as Japan Faces Monetary Overhaul (Bloomberg)
• Monte Paschi probe to widen as Italian election nears (Reuters)
• Hedge funds up bets against Italy's Monte Paschi (Reuters)
• Spain's opposition Socialists tell Rajoy to resign (Reuters)
• Electric cars head toward another dead end (Reuters)
• BlackRock Sued by Funds Over Securities Lending Fees (Bloomberg)

There are no limits on Central State and financial Aristocracy exploitation, but there are limits on what debt-serfs can pay. Since we can't print money, there are limits for us debt-serfs. There are also limits on how much we can extract from a neocolonial/neofeudal system as wages. This neocolonial/neofeudal financialization model will implode under its own weight, and that will be the crisis.

The current government stance on Marijuana and Online/Casino Gaming is making their position from a legal standpoint look completely arbitrary and lacking in credibility. 

• U.S. Wants Criminal Charges for RBS (WSJ)
• Bernanke Seen Buying $1.14 Trillion in Assets in 2014 (BBG)
• Irish banks at mercy of international paymasters (Reuters)
• Do badly, and we will let you do even worse: Rehn Signals EU May Ease Spain Budget Goal in Austerity Retreat (BBG)
• Too Soon to Celebrate for Europe's Banks (WSJ)
• Army says political strife taking Egypt to brink (Reuters)
• Media Firms Probed on Data Release (WSJ) - No Criminal Charges Seen
• Japan’s Government Proposes First Spending Cut in 7 Years (BBG)
• Nazi Goebbels’ Step-Grandchildren Are Hidden Billionaires (BBG)
• Goldman seeks to reduce China exposure (FT)
• More than 70% of Chinese airports generate losses (People's Daily)

Hope is dying in the US. The performance of financial markets affects everyone. For savers and investors, these markets represent the means to an improved life, at least as they define it. We are twelve years into this new century and Americans are losing their hopes, dreams and aspirations. Twelve years in, the S&P 500 has returned a total of 14%. That puny return has not come close to covering the decline in purchasing power of the dollar during the same period. The country's financial condition is deplorable and cannot continue much longer. So, too is virtually everything else the government has touched whether it be education, Amtrak, the post office, Social Security, Medicare, ad nauseum. Nothing government has done has not been a Ponzi scheme dependent upon additional theft from taxpayers to keep going. The system is now broken. There is no one to blame for this other than government. Despite this obvious conclusion, government is still seen to be a savior by a large proportion of the country.

The so-called recovery is built on sand, and as stock markets climb and climb, and more traders and investors turn bullish, we come ever-closer to a new 2008-style collapse. Soaring markets, and soaring speculation. Big finance using loopholes to speculate bigger and harder. Mainstream financial journalists becoming more and more complacent about the “recovery”. We’ve been here before. Isn’t repeating the same behaviour and hoping for different results the very definition of insanity?