NBC

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

"The financial problems of the Postal Service are getting bigger every year," is how US Postmaster General Donahoe tried to convinced Congress not to block the bill the end Saturday delivery of mail. Raising the specter of mutually assured destructive bailouts in the future, the CEO rattle lawmakers (and other stakeholders) as NBC News reports, Representative Darrell Issa noting "It's very clear that ultimately, either the rate payer or the taxpayer will have to pay the $20 billion in debt of the Postal Service." Indeed Mr. Issa - so by our reckoning the plan to tax emails was a non-starter and so we compare the 73.5 billion pieces of mail handled by the USPS and the $20bn budgetary gap, it would appear the answer is simple - the current 46c stamp will have to rise in value by 27c or 60% in order to meet the shortfall. The problem of course is the legal limit on increasing stamp prices is bounded by what the BLS' official annual inflation report is, and which as the Fed is happy to reminds us, is at best 2% per year. Luckily, every problem, in this case too little inflation, has a solution: in this case hyperinflation.

• Obama Paints Wider Role for Government in Middle Class Revival (BBG)
• Obama to Seek a New Trade Deal With EU (WSJ)... or this is strawman why 2016 GDP will be higher
• Mobile phone sales fall for the first time since 2009 (Telegraph)
• Sequester Looms, No Deal in Sight (WSJ)
• Neither US party swallows a compromise (FT)
• Embattled Economies Cling to Euro (WSJ)
• For China, Spending Is Harder Than It Looks (WSJ)
• Bank of England's Sir Mervyn King says recovery in sight (BBC) - just a little more inflation first
• G7 fails to defuse currency tensions (FT)
• Japanese Leader Urges Firms to Boost Wages (WSJ) - so does the US one
• Fed Bank Chiefs Back Money-Fund Overhaul (WSJ), or force everyone out of MMFs and into stocks

Bush and Obama Have Set Us Back 800 Years

Kangaroo Court Show Trials and Blatant Obstruction of Justice

After witnessing the fighting of undeclared never ending wars, passage of freedom destroying legislation like the Patriot Act & NDAA, approval of pork barrel spending to the tune of hundreds of billions, rule by Executive Order, using ZIRP to extract hundreds of billions from senior citizen savers and give it to criminal Wall Street banks, forcing the American people at gunpoint to replenish the Wall Street banks with $700 billion after they had committed the greatest financial fraud in history, and a continuing trampling of the U.S. Constitution, the American people continue to remain willfully ignorant of the truth. The American Dream is dead. We’ve allowed a rich, privileged, elite few to achieve hegemony over our economic and political system with their control of the media and manipulation of our financial markets. They will collapse the country because they will never be satisfied with the amount of wealth and power they’ve accumulated. Their voracious greed will be their downfall.

Military Recruits Young People Through Misleading First-Peson Shooter Games

The punchlines: "...the issue here is whether or not America pays its bills. We are not a deadbeat nation... And if the Republicans in Congress have made a decision that they want to shut down the government in order to get their way, then they have the votes, at least in the House of Representatives, probably to do that.... So we've got to pay our bills. And Republicans in Congress have two choices here. They can act responsibly, and pay America's bills, or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy ... We've got to stop lurching from crisis to crisis to crisis when there's this clear path ahead of us that simply requires some discipline, some responsibility, and some compromise. That's where we need to go. That's how this needs to work."....  Yet should the "worst" (i.e. living within its means) happen to the US, then "Social Security checks, and veterans benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialist who track down loose nuclear materials wouldn't get their paychecks. Investors around the world will ask if the United States of America is in fact a safe bet. Markets could go haywire, interest rates would spike for anybody who borrows money. Every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire.... As the speaker said two years ago, it would be, and I'm quoting Speaker Boehner now, "a financial disaster, not only for us, but for the worldwide economy.""

Still think "we are not a deadbeat nation"?

The second update of the day is here, and this one is far less jovial and optimistic than that coming from the seemingly quite cluless Lindsey Graham:

• REID SAYS HAVE BEEN UNABLE TO COME UP WITH COUNTEROFFER
• REID SAYS `WE'RE APART ON SOME PRETTY BIG ISSUES'
• REID SAYS `I WISH THEM WELL' REGARDING MCCONNELL-BIDEN TALKS
• MCCONNELL SAYS HE CALLED BIDEN TO TRY TO `JUMP START' TALKS

Nothing like the fate of the nation in the hands of Joe Biden, who may or may not still be laughing.

The beginning of the year has traditionally been a time of optimism when we all look forward to the exciting things that are going to happen over the next 12 months. Unfortunately, there are a whole bunch of things about 2013 that we already know are going to stink. Taxes are going to go up, good paying jobs will continue to leave the country, small businesses will continue to be destroyed, the number of Americans living in poverty will continue to soar, our infrastructure will continue to decay, global food supplies will likely continue to dwindle and the U.S. national debt will continue to explode. Our politicians continue to pursue the same policies that got us into this mess, and yet they continue to expect things to magically turn around. But that is not the way that things work in the real world. Bad decisions lead to bad outcomes. Sticking our heads in the sand and pretending that everything will be “okay” somehow is not going to help anyone.

• U.S. Family of Mao’s General Assimilates, Votes for Obama (Bloomberg)
• Iron ore prices hit eight-month high (FT)... four months after plunging and crushing iron ore miners
• Obama seeks 60 Senate votes for cliff deal (MarketWatch)
• Need. Moar. InfinitQEeee: Japan PM adviser urges unlimited BOJ easing, higher price goal (Reuters)
• Yen Touches 16-Month Low Versus Euro Before Japan CPI (BBG)
• China consumers driving economic rebound (Reuters) - ot just year end window dressing to accompany the new Politburo
• Rajaratnam agrees to pay $1.5 million disgorgement in SEC case (Reuters)
• France should review 2013 deficit target with EU partners (Reuters)
• Monti-led poll alliance takes shape (FT)
• Bersani wants growth-oriented Europe (FT)

Update 3: Adam had Aseprger Syndrome - a high functioning form of autism. In other words, watch as the debate rages over the traditional bogeyman of gun control, in a country with over three hundred million weapons, when we may well simply be talking about a mentally ill young adult.

Update 2 : NY Post now refuting CNN's initial report, and stating that the shooter's real name is Adam Lanza, not Ryan Lanza, who is instead brother of the latter. At this point there appears to be a ridiculous amount of confusion who did what, so it perhaps would be prudent on behalf of the authorities to double check this information before releasing it to the media.

Update: According to CNN the shooter's name is Ryan Lanza, out of New Jersey. Based on a White Pages reverse lookup there is an 18-24 year old Ryan Lanza living in Hoboken, NJ whose FaceBook profile lists Newtown, CT as his home city. Whether it is the same person remains to be confirmed officially.

Sadly, increasingly it appears that not a day, and certainly not a week can pass, in the US without news of some mass killing somewhere. Several days ago its was a mall in Oregon, and today it is a shooting rampage at the Sandy Hook Elementary school in Newtown, Connecticut. Here is what is known: the shooter, who CBS reports is a 20 year old from New Jersey, is reported to be dead. According to CBS 27 people are dead, of whom 18, Connecticut Post 27 people are dead, of whom 20 tragically, children. Among the dead are the principal and the school psychologist. The AP has already dubbed it "the worst school tragedy in American history."

In a world in which the Fiscal Cliff, including headlines, rumors, leaks, and mere whispers thereof, is the main show, all other data points are at best supporting data actors. There was a lot of support overnight - for the futures, which once again closed the prior session at the lows - with a battery of PMIs released, starting with the December HSBC China Flash PMI which printed at a excel picture perfect 50.9 vs an expectation 50.8 and above 50 for the second straight month, which sent the Shanghai Composite up 4.32%, and wiped out the bitter aftertaste from the Japan December large manufacturer Tankan index which tumbled to -12 on expectation of a -10 print, confirming the Japanese recession is deteriorating at the worst possible time. Then after China, Markit released a bevy of European PMI data which came in mixed: Services PMI rose from 46.7 to 47.8 in December, beating expectations of a 47.0 print, while the Manufacturing PMI rose modestly from 46.2 to 46.3, missing expectations of a 46.6 result. The biggest wildcard once again was Germany, where the Service PMI, like in the US, posted a sizable rise, posting above 50 for the first time in months, or at 52.1 on expectations of 50.0, and up from 49.7 last, although more disturbing was the ongoing collapse in German manufacturing which dipped from 46.8 to 46.3, on expectations of a rise to 47.2. French manufacturing data did not help posting a tiny rise from 44.5 to 44.6, missing expectations of a 45.0 print. Economic data was further confounded when Spain released its quarterly home price update, which dipped 3.8%, accelerated last quarter's -3.3% drop, and sliding by a massive -15.2% in Q3, faster than the -14.4% drop in Q2, and confirming Spanish housing has a long way to go before it is fixed.

• Bernanke Wields New Tools to Reduce Unemployment Rate (BBG)
• Home Seizures Rise as Banks Adjust to Foreclosure Flow (BBG)
• EU Backs Release Of Greek Aid (WSJ)
• Democrats Confident They Have 'Cliff' Leverage (WSJ)
• Americans Back Obama Tax-Rate Increase Tied to Entitlement Cuts (BBG)
• Goldman flexes tentacles: Treasury open to Carney radicalism (FT)
• Launch Fuels Asia Security Concerns (WSJ)
• BOJ’s Unlimited Loan Program Seen Open to Use by Hedge Funds (BBG) - there are Japanese hedge funds?
• Abe Set to Face Manufacturing Gloom as Japan Contracts (BBG)
• US and UN condemn N Korea rocket launch (Guardian)
• Eurozone agrees common bank supervisor (FT)
• Berlusconi Adds to Italy Turmoil by Signaling He’d Step Aside (BBG)

• Central Banks Ponder Going Beyond Inflation Mandates (BBG)
• Bloomberg Weighs Making Bid for The Financial Times (NYT)
• Hedge Funds Fall Out of Love with Equities (FT)
• Obama and Boehner resume US fiscal cliff talks (FT)
• Italy Front-Runner Vows Steady Hand (WSJ)
• Spanish Bailout Caution Grows as Business Lobbies Back Rajoy (BBG)
• Japan sinks into fresh recession (Reuters)
• China economic recovery intact, but weak exports drag (Reuters)
• Greece extends buyback offer to reach target (Reuters)  ... but on Friday they promised it was done
• Basel Liquidity Rule May Be Watered Down Amid Crisis (BBG) ... just before they are scrapped
• Irish, Greek Workers Seen Suffering Most in 2013 Amid EU Slump (BBG)