ratings

• California couple finds $10 million in buried treasure while walking dog (Reuters) ... not bitcoin?
• Dimon Says Threats to JPMorgan Span Google to China Banks (BBG)
• Stocks So Many Love to Hate Buoyed by Fed’s Jobs Priority (BBG)
• White House Weighs Four Options for Revamping NSA Phone Surveillance (WSJ) ... to pick the fifth one
• Credit Suisse Executives Weren’t Aware of U.S. Tax Dodges (BBG)
• Militias Hunt Kiev Looters From Central Bank to Bling Palace (BBG)
• Crisis Gauge Rises to Record High as Swaps Avoided (BBG)
• Obama to Propose Highway-Repair Program (WSJ)
• Ukraine Pledges to Protect Deposits as Kiev Rally Called (BBG)

It continues to amaze us how people are completely ignoring what appears to be an incredible amount of shadiness inherent in Facebook’s business model. Whether or not this is intentional click fraud, it is clear that advertisers are not getting what they think they are getting. They won’t be fooled forever, and once they wake up to the money being wasted on fake “likes” and “clicks,” We're curious to see what happens to their revenue... This will all be exposed by the market sooner or later. I’m just shocked it is taking so long for people to put two and two together.

• Ukraine Seeks $35 Billion as Yanukovych Warrant Is Issued (BBG)
• Ukraine's fugitive president wanted for mass murder (Reuters)
• Polar Vortex to Bring More Snow on Return to U.S. This Week (BBG)
• China property prices continue to rise (FT)
• Microsoft Said to Cut Windows Price 70% to Counter Rivals (BBG)
• Pentagon to propose shrinking Army, scrapping some jets (Reuters)
• Hedge Funds Turn Bearish on S&P 500 as VIX Advances (BBG)
• Draghi’s Data Jigsaw Takes Shape as ECB Readies Showdown (BBG)
• China, eyeing Japan, seeks WW2 focus for Xi during Germany visit (Reuters)

The world may have been crashing and burning, and as Bernanke admitted in March 2008, "At some point, of course, either things will stabilize or there will be some kind of massive governmental intervention, but I just don’t have much confidence about the timing of that" (guess which one it was), but at least the Fed ended the catastrophic 2008 yeat on a high note. The chart below shows the number of the time the FOMC committee had an moment of levity as captured by [Laughter] in the FOMC transcripts. Perhaps not surprisingly, the December 2008 meeting, when the market was in free fall, saw the biggest number of laugh lines in the entire year.

Over 7 in 10 Obama voters, and 55% of Democrats, regret voting for President Obama's reelection in 2012, according to a new Economist/YouGov.com poll. As The Washington Examiner reports, the poll was conducted to test the media hype about a comeback by 2012 Republican presidential nominee Mitt Romney. While the poll found voters still uninspired by Romney, they are also deeply dissatisfied with Obama (though given the choice of Obama versus Romney, Obama supporters said they would stick with their guy, 79% to 10% for Romney) giving Obama, as The Examiner notes, very early lame duck status before the midterm elections.

The global crisis that began in 2007/8 has unmasked many unsustainable economic dispositions. Unfortunately, the proper conclusions have still not been arrived at, as evidenced by the fact that the same old Keynesian recipes that have failed over and over again are being implemented on an even grander scale. One must not be misled by the claims of 'austerity' being imposed, as this has evidently little bearing on government spending as such, but is rather an attempt to squeeze more blood out of an already shriveled turnip, namely what remains of the private sector. Puerto Rico seems – at least so far – not any different in that respect.

If you have been waiting for the "global economic crisis" to begin, just open up your eyes and look around.  I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be "irrelevant" to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon.  Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber's wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet.  After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008.  As you will see below, the problems are not just isolated to a few countries.  This is truly a global phenomenon.

• Euro-Area Growth Eases Pressure on Draghi for Stimulus (BBG)
• Germany Beats Growth Estimates With France Amid Recovery (BBG)
• Argentina revises ‘bogus’ inflation figures (FT)
• Wells Fargo edges back into subprime as U.S. mortgage market thaws (Reuters)
• China Banks’ Bad Loans Reach Highest Since Financial Crisis (BBG)
• Time Warner Cable Deal to Test Comcast CEO's Washington Clout (WSJ)
• Risky Loans in Europe Banks’ Dark Corners to Be Exposed  (BBG) - yeah, right... sure
• Gold Extends Climb Above $1,300 as Investors Boost SPDR Holdings (BBG)
• SEC Takes Steps to Stem Courtroom Defeats (WSJ)

• Comcast Agrees to Buy Time Warner Cable for $45.2 Billion (BBG)
• Italian leadership squabble weighs as shares halt hot run (Reuters)
• Russia says Syria aid draft could open door to military action (Reuters)
• China trust assets rise 46% in 2013  (WSJ), China Trust Assets Surge to $1.8 Trillion Amid Default Risks  (BBG)
• Australian Unemployment Jumps to 10-Year High (BBG)
• Tea Party Scorns Republicans as House Lifts Debt Ceiling (BBG)
• Peso plunge forces Argentine soya hoarding (FT)
• BNP Paribas Net Falls After $1.1 Billion U.S. Legal Charge (BBG)
• Hacking Joins Curriculum as Businesses Seek Cyber Skills (BBG)
• Android's 'Open' System Has Limits (WSJ)
• Blackstone-Fueled Single-Family Home Boom Lifts Chicago (BBG)

By hosting the Winter Olympics in Sochi, Russia has brought a surge of international attention to the state of its economy, its interethnic relations, its domestic politics, and its foreign policy. Already much of the scrutiny has become unwelcome. The reluctance of many foreign leaders to come to Sochi provides a convenient scorecard by which to evaluate Russia’s global standing. Corruption, terrorism, human rights protests, high-level no-shows—all these represent ways in which the Sochi Olympics have embarrassed Putin. Yet in each case, the problem goes well beyond any connection to the Games. Each reflects a major tension in the system that Putin has created...

Three days ago it was S&P that opened the can of Puerto Rico junk worms. Moments ago it was Moody's turn to downgrade the General Obligation rating of the Commonwealth from Baa3 to Ba2, aka junk status. We note this just in case someone is confused what the catalyst was that just sent stock to a new intraday high in the aftermath of today's disappointing jobs number which until this moment barely managed to push the S&P higher by 1%. From the report: "While some economic indicators point to a preliminary stabilization, we do not see evidence of economic growth sufficient to reverse the commonwealth's negative financial trends. Without an economic revival, the commonwealth will face difficult decisions in coming years, as its debt and pension costs rise. The negative outlook signals the remaining challenges facing the commonwealth."

Having benefited from the earlier QE-un-taper hope, the Turkish Lira is dropping rapidly following the move by S&P to put Turky on negative outlook:

• *TURKEY'S OUTLOOK TO NEGATIVE FROM STABLE BY S&P
• *S&P SEES RISKS OF HARD ECONOMIC LANDING IN TURKEY

Furthermore, the ratings agency raising questions over the Central Bank:

• *TURKEY SUFFERING EROSION OF GOVERNANCE STANDARDS, S&P SAYS
• *TURKEY SUFFERING EROSION OF CHECKS AND BALANCES, S&P SAYS
• *CONSTRAINTS ON TURKEY CENBANK INDEPENDENCE: S&P.

EM Un-fixed.

Following the evaluation of liquidity needs (and availability) for the Commonwealth of Puerto Rico, S&P has decided that "it doesn't warrant an investment-grade rating":

• PUERTO RICO GO RATING CUT TO JUNK BY S&P, MAY BE CUT FURTHER
• GOVT. DEVELOPMENT BANK FOR PUERTO RICO CUT TO BB FROM BBB-:S&P
• PUERTO RICO GO RATING LOWERED TO 'BB+': S&P
• PUERTO RICO REMAINS ON WATCH NEGATIVE FROM S&P

Both the G.O.s and the Development Bank have been cut. Note that 70% of muni mutual funds own this - and it is unclear if a junk rating forces (by mandate) funds to cover. Worst of all, S&P warns Puerto Rico could now face a $1 billion collateral call on short-term debt - the same waterfall collateral cascade that took down AIG.

• Emerging-Market Rout Seen Enduring on Low Real Rates (BBG)
• After rocky January, markets eye data and central banks (Reuters)
• Europe will feel the pain of emerging markets  (FT)
• Lloyds delays dividend prospect after mis-selling charge (Reuters)
• Snow Set to Snarl New York Commute as U.S. Flights Halted (BBG)
• Rate Decision to Drive Yellen's Early Agenda  (Hilsenrath)
• Thai protesters move to downtown Bangkok in bid to topple PM (Reuters)
• China says Japan's 'hype' on air defence zone spreads tension (Reuters)
• Hedge funds seek 1.8 billion euros damages from members of Porsche's owning family (Reuters)

There is no point in trying to avert or prevent bubbles caused by monetary pumping by regulatory means. If one avenue for bubble formation is cut off, the newly created money will simply flow into another area. In fact, new bubbles almost always become concentrated in new sectors. If there were a genuine desire to keep the formation of bubbles in check, adopting sound money would be a sine qua non precondition. However, no-one who has any say in today's system has a desire to adopt sound money and give up on the failed centrally planned monetary system in favor of a genuine free market system. Our guess is that the booms and busts the current system inevitably produces will simply continue to grow larger and larger until there comes a denouement that can no longer be 'fixed'.