The U.S. Constitution leaves too many areas open to interpretation; a New Constitution of 2,300 pages (+ 200 redacted secret pages) is the solution.
- Janet Yellen, a Backer of Pushing the Fed's Policy Boundaries (WSJ)
- Jos. A. Bank proposes to buy Men's Wearhouse for $2.3 billion (Reuters)
- J.P. Morgan to Cull Business Clients (WSJ)
- RBS Said to Pass Currency Trader Chats to FCA Amid Probe (BBG)
- Prosecutors give SAC settlement ultimatum (FT)
- U.S. builders hoard mineral rights under new homes (Reuters)
- Bill Comes Due for Brazil's Middle Class (WSJ)
- US expected to slash aid to Egyptian government (AP)
- Samsung launches world's first smartphone with curved screen (Reuters)
- Microsoft’s $7.2 Billion Nokia Bet Not Luring Apps (BBG)
- China raises hurdles for foreign banks (FT)
As we have discussed previously, the "partial government shutdown" that we are experiencing right now is pretty much a non-event - especially with the un-furloughing of The Pentagon. Yeah, some national parks are shut down and some federal workers will have their checks delayed, but it is not the end of the world. In fact, only about 17% of the federal government is actually shut down at the moment. This "shutdown" could continue for many more weeks and it would not affect the global economy too much. On the other hand, if the debt ceiling deadline (approximately October 17th) passes without an agreement that would be extremely dangerous. A U.S. debt default that lasts for more than a couple of days could potentially cause a financial crash that would make 2008 look like a Sunday picnic. If a debt default were to happen before the end of this year, that would bring a tremendous amount of future economic pain into the here and now, and the consequences would likely be far greater than any of us could possibly imagine.
Our grandparents believed in the value of thrift, but many of their grandchildren don’t. That’s because cultural and economic values have changed dramatically over the last generations as political and media elites have convinced many Americans that saving is passé. So today, under the influence of Keynesian economists who champion government spending and high levels of consumption, thrift has been devalued (and is even punished). It is the government’s role, Keynes’s followers believe, to keep the boom going through spending. So it is consumption, not supply, that makes a successful economy, they say. Mainstream media rehashes the message that the consumer, not the producer, is the biggest part of the economy. Politicians agree... But, despite the Keynesian sentiments of much of our political and media elites, we owe it to our grandparents to re-learn the lessons of thrift.
One of the most frequent questions related to the debt limit is whether the Treasury could prioritize payments in order to remain below the debt limit while continuing to make what it deems to be essential payments. As Goldman explains below, technical complexities and legal uncertainties might prevent a full prioritization of all payments, but they do believe (trillion-dollar-coin idiocy aside) that the Treasury could ensure that enough cash is available to make interest payments on Treasury securities.
Overnight trading over the past week has been a bipolar affair based on algo sentiment about what is coming out of D.C. But which the last session was optimistic for some inexplicable reason that a deal on both the government shutdown and the debt ceiling out of DC was imminent, today any optimism is gone in the aftermath of the latest comments by Boehner on ABC, in which he implied that a US default is not unavoidable and that it would be used as more political capital, as it would be once again blamed on Obama for not resuming negotiations. As a result both global equities and US futures are down sharpy in overnight trading. And since the government shutdown, better known as a retroactively paid vacation, for everyone but the Pentagon (whose 400,000 workers have been recalled from furlough) continues it means zero government economic statistics in today's session with the only macro data being the Fed-sourced consumer credit report at 3 pm. This week also marks the unofficial start of the Q3 reporting season in the US with Alcoa doing the usual opening honous after the US closing bell tomorrow. JPMorgan’s and Wells Fargo’s results on Friday are the other main ones to watch to see just how much in reserves are released to pretend that banks are still making money. As usual, expect disinformation leaks that send the market sharply higher throughout the day, which however will only make the final outcome that much more painful, because as during every US government crisis in the past, stocks have to plunge so they can soar again.
Veteran New York Times Reporter: “This Is Most Closed, Control-Freak Administration I’ve Ever Covered”Submitted by George Washington on 10/06/2013 19:44 -0400
Seasoned CBS News Anchor: “Whenever I’m Asked What Is The Most Manipulative And Secretive Administration I’ve Covered, I Always Say It’s The One In Office Now”
The last few days have been punctuated with fearmongery from Alexander and Clapper over the shutdown's impact on the NSA and the increased threat of terror this generates. However, as the Washington Times reports, things are a little different in reality. Pressed by the Democratic chairman of the Senate Judiciary Committee at an oversight hearing, Gen. Keith B. Alexander admitted that the number of terrorist plots foiled by the NSA’s huge database of every phone call made in or to America was only one or perhaps two — far smaller than the 54 originally claimed by the administration.
In a tragic development, the unidentified man who set himself on fire on the National Mall at about 4:30 p.m. on Friday in between the Air and Space Museum and the National Gallery, and who sustained burns to 80% of his body, has died. AP reports: "A District of Columbia police spokesman says a man who set himself on fire on the National Mall has died his injuries. Officer Araz Alali says the man died Friday night at a hospital where he had been airlifted. He says the man was so badly burned that he will need to be through DNA and dental records. The man poured a can of gasoline on himself in the center portion of the mall Friday afternoon. He then set himself on fire, with passing joggers taking off their shirts to help douse the flames." As AP adds, Police are investigating the man's possible motives for doing so. They will hardly find any, as the last thing the Obama administration needs right now is to start explaining why D.C. has become ground zero for America's own Arab Spring. Especially, if in a country in which fomenting class and social hatred once again boils down to racial characteristics.
“Spies … Can Now, For The First Time, Monitor Everything About Us, And They Can Do So With A Few Clicks Of A Mouse And – To Placate The Lawyers – A Drop-Down Menu Of Justifications”
There really is very little reason why this "government shutdown" cannot continue indefinitely because almost everything is still running. 63 percent of all federal workers are still working, and 85 percent of all government activities are still being funded during this "shutdown". It turns out that the definition of "essential personnel" has expanded so much over the years that almost everyone is considered "essential" at this point. In fact, this shutdown is such a non-event that even referring to it as a "partial government shutdown" would really be overstating what is actually happening. In the end, this shutdown could turn out to be very good for America. We have a government that is wildly out of control and that desperately needs to be reigned in.
Any hopes that tonight's meeting between the president and members of Congress, which lasted about an hour, would yield results just went up in smoke:
BOEHNER SAID OBAMA REITERATED HE WILL NOT NEGOTIATE
BOEHNER SAYS TIME FOR SENATE TO APPOINT NEGOTIATORS
Reid chimes in:
- REID SAYS BOEHNER HAS TO ACCEPT `YES FOR AN ANSWER'
Which means the government shutdown will proceed into its third day, with little hope for a political resolution on the horizon.
With the BLS shutdown, and this Friday's NFP report indefinitely delayed, the only labor report this week would be the (highly inaccurate) anticipated ADP Private Payrolls data. Moments ago it came, and disappointed all those hoping that finally, after five years, the Fed's shotgun wealth creation strategy may be working when it not only missed expectations of 180K, instead printing at 166K with the bulk of jobs created in the service-providing sector, but excluding massive downard revisions (July from 198K to 161K, August from 176K to 159K), would have been the lowest print of the past 4 months. And while, finally, some 1000 manufacturing jobs were created in September, for the first time in over a year the high-paying financial sector saw an exodus of 4000 jobs. Wave goodbye to the "third half" 2013 recovery.
- Government Heads Toward Shutdown (WSJ), First U.S. Shutdown in 17 Years at Midnight Seen Probable (BBG), Congress in game of chicken (RTRS)
- Italian Premier Pursues Last-Ditch Rescue of Government (WSJ)
- Election risk rattles Italian government bonds (RTRS)
- Obama and Ryan Stay on Sidelines on Budget (WSJ)
- Volcker Rule Costs Tallied as U.S. Regulators Press Deadline (BBG)
- Faltering Chinese Factory Growth Adds to Rebound Fears (FT)
- Health Law Hits Late Snags as Rollout Approaches (WSJ)
- Apple Overtakes Coca-Cola as Most Valuable Brand, Study Finds (BBG)
- Euro-Area September Inflation Slows More Than Forecast on Energy (BBG) - Puting will fix that shortly
Back in August, just after the false flag chemical weapon attack in Syria, we showed that despite all the posturing by the Obama administration (and, of course, France's belligerent, socialist leader Francois Hollande), the nation behind the entire Syrian campaign was not one of the "democratic", Western nations but none other than close neighbor Saudi Arabia, and the brain orchestrating every move of the western puppets was one Bandar bin Sultan, the nation's influential intelligence chief. We also explained the plethora of geopolitical and mostly energy-related issues that Saudi and Qatar had at stake, which they were eager to launch a regional war over, just to promote their particular set of selfish interests. A month later, in clear confirmation that this was precisely the case, the WSJ reported that the recent overtures by Obama, brilliantly checkmated by Putin, to push for a peaceful resolution with not only Syria, but suddenly Iran as well, has managed to infuriate Saudi Arabia: traditionally one of the US' closest allies in the region and the key source of crude oil to the western world.