New York Times

D'Oh!

In May 22 testimony to the Joint Economic Committee of Congress, Fed Chairman Ben Bernanke issued another of many similar positive interpretations of central bank policy. Yet again, he continued to argue that quantitative easing has decreased long-term interest rates and produced other benefits. The Fed's polices have not produced the much-promised re-acceleration in economic growth. The standard of living - defined as median household income - has fallen back to the level of 1995. The best approach would be for the Fed to recognize the failure of QE and end the program immediately, thereby allowing price distortions in the markets to correct themselves. By ending the illusion that the Fed can take constructive actions, this might even serve to force federal government leaders to deal with the growing fiscal policy imbalances. Otherwise, debt levels will continue to build and serve to further limit the potential for economic growth.

• Fukushima: "300 metric tons of contaminated water were likely leaking into the ocean daily" (WSJ)
• Unexpected strength in China trade data eases some gloom (Reuters) - actually, perfectly expected data fakery
• Pimco, BlackRock Seek to Bar California Mortgage Seizures (BBG)
• How will Amazon's Bezos change The Washington Post? (Reuters)
• Montreal Maine Railway Files for Bankruptcy After Crash (BBG)
• Fed Belongs to Everybody as Public Says It’s Our Money in Crisis (BBG)
• Local Russian TV channel broadcasts rare critical segment about Putin (Reuters)
• Loeb’s Reinsurer With No U.S. Staff Gains From Obama’s Jobs Act (BBG)
• As Berlusconi star fades, daughter Marina tipped as new leader (Reuters)
• Detroit Rattles Muni Market (WSJ)

There was a time when wealthy foreigners would frequently travel all the way to these United States in order to receive top notch medical attention. Fast forward a decade or two, and all we hear about now is how it is us Americans being forced abroad in order to receive affordable care. From a hip and knee implant cartel of five companies, kickbacks to surgeons, salespeople in the operating room, massive bureaucratic red tape and rampant price gouging, in complete contrast to the Hippocratic Oath; it is perhaps no surprise that "the list price of a total hip implant increased nearly 300 percent from 1998 to 2011."

"No passion so effectually robs the mind of all its powers of acting and reasoning as fear."

- Edmund Burke

Some analysts and Congressional officials suggested Friday that emphasizing a terrorist threat now was a good way to divert attention from the uproar over the N.S.A.’s data-collection programs, and that if it showed the intercepts had uncovered a possible plot, even better.

- NY Times article from August 2, 2013: Qaeda Messages Prompt U.S. Terror Warning

• Botulism toxin? There's an apology for that - Fonterra CEO apologizes, sees China dairy curbs lifted within days (Reuters)
• Patent troll-In-Chief strikes again: Veto of Apple Ruling Likely to Upend Big Patent Battles (WSJ)
• Because scapegoating means justice FTW - SEC Gets ‘Shot in the Arm’ With Victory in Tourre Case (BBG)
• Insider-Trading Probe Caught in a Washington Knot (WSJ)
• Miners return to hedging as gold  (FT)
• Toyota’s $37 Billion Cash Pile Means Turning Point for Abenomics (BBG)
• Inside the battle at Germany's Siemens (Reuters)
• ‘One million’ UK workers on zero hours contracts (FT)
• Wag the dog, part 1984: Iran Seen Trying New Path to a Bomb (WSJ)
• Tokyo Cheap to Hong Kong Luring Asian Bargain Hunters (BBG)

Greed; corporate arrogance; lobbying influence; excessive leverage; accounting tricks to hide debt; lack of transparency; off balance sheet obligations; mark to market accounting; short-term focus on profit to drive compensation; failure of corporate governance; as well as auditors, analysts, rating agencies and regulators who were either lax, ignorant or complicit. This laundry list of causes has often been used to describe what went wrong in the credit crunch crisis of 2008-2010. Actually these terms were equally used to describe what went wrong with Enron more than twenty years ago. Both crises resulted in what at the time was the biggest bankruptcy in U.S. history — Enron in December 2001 and Lehman Brothers in September 2008. Naturally, this leads to the question that despite all the righteous indignation in the wake of Enron's failure did we really learn or change anything?

Amid all the high-fives over stocks hitting all-time highs and Edward Snowden's temporary freedom hogging the headlines yesterday, State Department spokesperson Marie Harf quietly pointed out that, due to an "abundance of caution," an unspecified number of US embassies and consulates in the Muslim world will be closed this weekend (and diplomatic facilities maybe longer). House foreign affairs committee chairman Royce suggested this morning that this closure is 'Al-Qaeda-threat-related'; and, as AP reports, the last major warning came last fall when embassies warned American diplomatic facilities across the Muslim world of potential violence around Sept. 11. (and the disaster that was Benghazi). But we can't help but worry about the coincident 'leak' by US officials of Israel's airstrike on Syria (and the potential forced response from Assad this would seem to portend).

Trough-feeding debtism faces the need to clean up its detritus.  

Tepco Has NO IDEA How to Stabilize the Reactors

There is no doubting the massive reserves of fossil fuels still lying close to or just beneath the earth’s surface. One of the key points made in the first edition of Insight back in February is that we must factor in the cost of processing those fossil fuels before they can enter the energy market. The future of energy production is as much as about the economic cost of processing those supplies as it is about the extraction. 

Mass Surveillance Is “Killing Our Most Productive Golden Goose”

Problem ... What Problem?

Gold owners are almost universally familiar with the story of Franklin Roosevelt criminalizing the ownership of gold back in 1933. The term gold ‘nationalization’ is often thrown around. But remember, with nationalization, it’s the state that takes control of an asset. Executive Order 6012 took assets from private individuals, and then gave those assets to a private company – the Federal Reserve. This isn’t nationalization. It’s just theft. You’d think that the entire nation would have been in an uproar. But surprisingly, this wasn’t the case. History shows that the likelihood of a government pillaging its citizens’ wealth is directly proportional to that government’s fiscal health.

Kate and William had a boy. Our bet on a name is George, but only because that appears to be the odds-on favorite among the London bookies.  Still, all that money flowing around must at least be a little “Smart”, right?  But as ConvergEx's Nick Colas notes, the same dynamic applies, albeit on a larger and hopefully more informed scale, when it comes to how capital markets price securities.  We have our baselines – the price-earnings ratio of the market, the interest rate on Treasuries, the average price per square foot for real estate, and so forth – and then we tweak everything else up or down from there.  That method has the benefit of simplicity, but comes with problems as well.  More than anything, Colas warns, it pushes investors to “Anchor” their notions of valuation to benchmarks which may move when the wind shifts.