The ear-piercing screech of the German export machinery as it down-shifts....
Just because one foreign - note: not local because US bankers know very well where the bodies are buried - bank (whose CEO forgot to bribe American congressmen as efficiently as some other bank CEOs), namely HSBC, was not enough to convince Americans just how active America's corrupt political muppets are when it comes to eradicating the evil banking scourge, here comes redirection target #2:
- STANDARD CHARTERED MAY FACE SUSPENSION OVER IRAN TRANSACTIONS
- BANK HAD $250 BLN IN TRANSACTIONS WITH IRAN, REGULATOR CLAIMS
- STANDARD ORDERED BY N.Y. FINANCIAL REGULATOR TO HIRE MONITOR
- STANDARD CHARTERED ORDERED TO APPEAR BEFORE N.Y. REGULATOR
Even as the ECB is desperately doing its best to stick a finger in every hole in the leaking European dam, in which just like in the US failed monetary policy is a substitute for sound fiscal one, and in which the pattern of interventions and cause and effect will now follow that of Japan until the bitter end, others are not waiting around to see the results. Reuters reports that Royal Dutch Shell is pulling some of its funds out of European banks "over fears stirred by the euro zone's mounting debt crisis, The Times reported on Monday." And shell is not the only one: more and more institutional are actively preparing to lock up their cash on a moment's notice, an eventuality which can be seen best at the ECB itself, where deposits with the ECB (collecting 0.00%), dropped to just €300 billion the lowest since 2011, while the ready for withdrawal current account saw holdings rise to a record €550 billion overnight, a €20 billion increase overnight. And so the cycle repeats anew, and Gresham's law rises to the surface, as bad money pushes out good money, and in return the situation deteriorates once more, until the next time much more than just harsh language out of the ECB will be needed just to preserve the status quo.
Human nature hasn’t changed in centuries. We have faith that humanity has progressed, but the facts prove otherwise. We are a species susceptible to the passions of power, greed, delusion, and an inflated sense of our own intellectual superiority. And we still like to kill each other in the name of country and honor. There is nothing progressive about crashing the worldwide economic system and invading countries for “our” oil. History has taught that there will forever be manias, bubbles and the subsequent busts, but how those in power deal with these episodes has been and will be the determining factor in the future of our economic system and country. Humanity is deeply flawed; the average human life is around 80 years; men of stature, wealth, over-confidence in their superior intellect, and egotistical desire to leave their mark on history, always rise to power in government and the business world; this is why history follows a cyclical path and the myth of human progress is just a fallacy.
If the political tsunami underway in Maine is any indicator, the November 2012 election will be fascinating and unpredictable
While normally quite absurd, we do have to admit that last month, Deutsche Bank's Joe LaVorgna was among the analysts closest to the final actual number, which came in far below consensus. As such we give him the benefit of the first forecast: Joe LaVorgna is expecting a headline/private payroll increase of 75k/80k respectively. The market is looking for 100k/110k. Unemployment is expected to hold at 8.2%. The irony today is that max pain is a far stronger number, which in light of some very recent economic news, can not be ruled out (see Nick Colas' discussion below): if indeed NFP rises by well over 100,000 the market will have to push back its prayer that the NEW QE will come in September into 2013 as Bernanke will not do another easing round just as the presidential election approaches. What are some others thinking? Here is what Bank of America says.
FAIL | Lender Processing Services (LPS) Announces Settlement of CRIMINAL FELONY Case Brought by Missouri AGSubmitted by 4closureFraud on 08/02/2012 23:39 -0500
WTF? Talk about regulatory (sellouts) capture. Now they are throwing the former president of DOCX, Lorraine Brown, to the wolves? She was the witness that was suppose to seal LPS' (criminal) fate. Hope she doesn't end up dead like the last informant, Tracy Lawrence.
In today's episode of blast from the past, Bloomberg's Jonathan Weil takes us on a time journey, which presents the Too Big To Fail bank problem from a different perspective: that of the Cocaine Cowboy roaming the streets of Miami in the late 1970s and early 1980s. Just like today's big banks they were untouchable; just like today's banks they were collaborating and existing in perfect symbiosis with the Federal Reserve; just like today the Cocaine Cowboys existed in an untouchable vacuum courtesy of endless bribes to the local law enforcement and judicial officials, and just like today, the TBTF institution du jour isn't "merely an economic problem. It is a great moral failing of our society that poisons our democracy." Back then, Ronald Reagan stepped in just when Miami (whose real estate market had soared in 1979-1981 courtesy of rampant crime and money laundering: hint hint NAR anti money-laundering exemptions) was about to be overrun, forming a task force that in the nick of time restored law and order. Today we are not that lucky, as there is not a single politican willing to risk it all just to eradicate the modern version of a classic scourge: only this time they don't hand out 8 balls; they give away 0% introductory APR cards and 3 Year NINJA Adjustable Rate Mortgages. Both however get you hooked for life: either on drugs or on debt. Will someone step up this time and form a task force to eliminate the second coming of the Cocaine Cowboy? Sadly, we don't think so. At least not until the next great crash happens.
When it comes to building wealth, muddying the difference between perception and reality is the key manipulation tool that banksters use to goad people into wrong choices.
While markets await details on the next round of quantitative easing (QE) -- whether refreshed bond buying from the Fed or sovereign debt buying from the European Central Bank (ECB) -- it's important to ask, What can we expect from further heroic attempts to reflate the OECD economies? The 2009 and 2010 QE programs from the Fed, and the 2011 operations from the ECB, were intended as shock treatment to hopefully set economies on a more typical, post-recession, recovery pathway. Here in 2012, QE was supposed to be well behind us. Instead, parts of Southern Europe are in outright depression, the United Kingdom is in double-dip recession, and the US is sweltering through its weakest “recovery” since the Great Depression. QE is a poor transmission mechanism for creating jobs. It wasn’t supposed to be this way.
For months the European Union, the IMF and the European Central Bank focused all of their attention on the giant firewall that was supposed to protect the core countries of Europe. It was all a diversion and one that, once again, did not work. I think the real problem is that the European Union has come to believe their own concocted nonsense. I think they honestly believe that it is some band of speculators, some Jesse James type of gang riding out of the American West that is trying to drive up European interest rates and destroy their beloved construct. The bonds of Germany, France, the Netherlands et al now trade at negative levels in the short end; this is not that the credits are so great it is that a lot of European money is mandated to stay in Europe so that the money has been put in the safest places available within the mandate and hence negative yields. Germany is becoming troubled economically and will be in a recession along with the rest of Europe by the fourth quarter of this year. We suspect both the ECB and Fed will disappoint as the expectations, especially for the ECB, to provide some kind of miracle will not be the manifest destiny hoped for by many.
The middle of the end is coming, The beginning of the end started in 2008, BTW...
Factual data point after factual data point is indicating more than a little stress in the Chinese economy (and the Asian engine of growth in general). Whether it is bank loan losses escalating, shadow-banking stress, real-estate corruption, dismal retail spending, the shrinking textile industry, the artificial production in the crushingly slow metals industry, the construction industry's contraction, or the massive '50%-above-demand' channel-stuffing now occurring in the Chinese auto market, Diapason Commodity's Sean Corrigan succinctly notes: "China bulls will not heed any of this, of course, for they are prisoners of the nested illusion that all increases in outlay represent genuine growth (cf, Occidental property bubbles) and that higher growth must imply greater profitability. They will also argue, on any uptick in the macro numbers, that the worst is not only behind us, but that it has been more than fully priced in." Given a picture paints a thousand words; Asian trade volumes have ended their rebound and are now exhausted, just as Chinese authorities are still giving off signals that they will not repeat the indiscriminate orgy of spending of 2009-10.
Below is an email that I recieved from a reader:
How can such a small country blow through so much money?