The war against privacy is ultimately being fought to make sure you don't keep anything hidden when the global government funding crises comes to a head.
The latest policy being implemented by Governments around the world consists of simply making data points up when reality doesn’t conform to their wishes.
After a self-imposed gag order by the mainstream media on any coverage of the Fukushima disaster (ostensibly the last thing the irradiated Japanese citizens needed is reading beyond the lies of their benevolent government, and TEPCO, and finding out just how bad the reality is especially since the key driver behind Abenomics is a return in confidence at all costs), the biggest nuclear catastrophe in history is once again receiving the attention it deserves. This follows the recent admission by TEPCO of the biggest leak reported at Fukushima to date, which forced the Japanese government to raise the assessment of Fukushima from Level 1 to Level 3, even though this is merely the catalyst of what has been a long and drawn out process in which Tepco has tried everything it could to contain the fallout from the exploded NPP, and failed. And today, in a startling and realistic assessment of Fukushima two and a half years after the explosion, the WSJ finally tells the truth: "Tepco Has Lost Control."
You know when one of the kids pilfers something out the fridge when they shouldn’t be delving in there and you catch them with the cake crumbs crumbling from the corner of their mouth?
Barack Obama has been running around the country taking credit for an "economic recovery", but the truth is that things have not gotten better under Obama. Compared to when he first took office, a smaller percentage of the working age population is employed, the quality of our jobs has declined substantially and the middle class has been absolutely shredded. If we are really in the middle of an "economic recovery", why is the homeownership rate the lowest that it has been in 18 years? Why has the number of Americans on food stamps increased by nearly 50 percent while Obama has been in the White House? Why has the national debt gotten more than 6 trillion dollars larger during the Obama era? Obama should not be "taking credit" for anything when it comes to the economy. In fact, he should be deeply apologizing to the American people.
Even after seven years of writing macroeconomic analysis and bearing witness to astonishing displays of financial and political stupidity by more “skeptics” than we can count, it never ceases to amaze us the amount of blind faith average Americans place in the strength of the U.S. dollar. One could explain in vast categorical detail the history of fiat currencies, the inevitable destruction caused by inflationary printing and the conundrum caused when any country decides to monetize its own debt just to stay afloat - often, to no avail. The dollar is no more invincible than any other fiat currency in history. In some ways, it is actually far weaker than any that came before. The dollar is entirely reliant on its own world reserve status in order to hold its value on the global market.
While we found it modestly comedic (and certainly ironic) that CNBC's crack team celebrated the recovery from the initial knee-jerk drop in stocks after the FOMC by top-ticking that suspension of reality; we suspect the following post-mortem from Goldman on the minutes is what confirmed concerns across the street... "Minutes from the July 30-31 FOMC meeting were generally consistent with our view that tapering of asset purchases is likely to occur at the September meeting, coincident with an enhancement of the forward guidance."
UPDATE: S&P futures are sliding modestly lower after-hours approaching the 100DMA at 1627
As Cramer, Liesman, and Terranova circle-jerked over stocks' algo-driven reaction to the knee-jerk dump after the Fed minutes were released, it was clear that bonds had not drank the same JPY-weakness-from-USD-safety-flow-based carry exuberance that stocks had. After ramping on the back of a VIX/JPY squeeze - all the way to yesterday's late-day cliff-dove levels, stocks collapsed back towards the day's lows (and are below them in the after-market). The Dow is down 6 days in a row - the worst run in almost 14 months (and the biggest 6-day drop in 9 months). Bonds were slammed and really never looked back after the minutes (with the belly +10bps or so!) offering a reality check for anyone gazing dream-like at stocks. Post-minutes, the S&P is -8points, 10Y yields +7bps, USD +0.2%, WTI -0.1%, and gold down a mere $2.
More of the same downward drift this overnight trading session, with early Asian outflows coupled with a fresh record low in the Indian currency, driven in part by reports the Fukushima leak severity had been raised from Level 1 to Level 3, which however subsequently reversed following a weakening in the JPY and pushed the Nikkei from a steep early drop to a modest green close. China was unchanged even as Fan Jianping, chief economist at the State Information Center, said that a new reasonable range for China’s growth is 7%-9%, Xinhua said and ongoing liquidity additions by the PBOC. In Europe, newsflow was dominated early on by a Suddeutsche report that the third Greek bailout would be likely financed in part by EU budget as the reality that nothing is fixed in Europe slowly returns and fears that the latent and non-existent OMT will eventually have to be used. US futures have seen a modest risk off bias in part driven by concerns what today's key event, the FOMC minutes due out at 2 pm, would reveal (if anything new). Also on deck are Existing home sales at 10:00 am which expect a slight pick up to 5.15 million from a 5.08 million prior print. Moments ago the latest weekly MBA Mortgage Applications number came out and, to nobody surprise, it posted the last weekly decline, dropping another 4.6% with conventional refis dropping for the 10th consecutive week.
"While many of you have asked what our plans are for this holding, as with our other investments, we do not disclose in advance what we intend to do in the future for obvious reasons. After our failed proxy contest at Target, we held our investment for more than 19 months until the price rose to a level where we found better uses for capital. We may choose to exit J.C. Penney after more or less time depending on developments at the Company, the stock price, and the availability of other investment opportunities." - Bill Ackman, August 20
The current belief is that rising interest rates are a sign that the economy is improving as activity is pushing borrowing rates higher. In turn, as investors, this bodes well for corporate profitability which supports the current valuations of stocks in the market. While this seems completely logical the question is whether, or not, this is really the case? Increases in interest rates slow economic activity, with a lag effect, which negatively impacts earnings, margins and forward guidance. Ultimately, and it may take several quarters to manifest itself fully, the fundamental deterioration leads to a reversion in stock market prices which, ironically, will then lead to the next decline in rates.
Do those collecting three times the median wage really need the same SSA benefits as those with no other retirement income? The conventional answer is that any means testing of Social Security would destroy its political popularity, but in reality such means-testing would likely affect only the top (higher-income) 10% of the populace. "We wuz promised" does not apply to "pay as you go" systems, which are extraordinarily exposed to current trends and realities. It's time for America to examine the social contract/Social Security in an era of declining full-time employment and widening income inequality. We as a nation need to prioritize the Social Security retirement income of those with no other pension incomes.
When a sophisticated hedge fund manager takes a position in the most senior segment of a failing retail form's capital structure, it is not a bet on recovery: it's a bet on being long the fulcrum security in an upcoming chapter 11, or at worst, on having collateral coverage to cover your exposure in a liquidation Chapter 7... And for anyone who spent more than 2 minutes deciphering this morning's JCP results will know, the cash burn is immense and outweighs any glib PR-strewn headlines that support a positive future. In fact, even the CFO noted he did not see any major trend change in the short-term (i.e. more of the same downtrend?) Of course, that didn't stop CNBC's Jim Cramer from talking it up pre-market (to a 8.9% gain before the bell) as he exclaims in the clip below "this is an amazing quarter... I am positive, the stock will go higher." Well, 60 minutes after retail got their first chance to buy, JCP is down 9% from its open, in the red for the day, and reflecting more closely the dismal reality that credit markets remain convinced of.
The story of the German Finance Ministry stating Bitcoin is essentially “legal tender” has been making the rounds all over the virtual currency and technology world this morning and for good reason. This is a very, very big deal. Not just because some bureaucrat seemingly “legitimizes” the crypto-currency, but because it is the first commonsense approach from a major economy to-date. While the U.S. government runs around like a chicken with its head cut off, issuing subpoenas and launching Senate investigations on Bitcoin, Germany is merely accepting the obvious. A lot of people will state this is merely a veiled move of support in order to make sure the government can install a system of taxation on Bitcoin. While that is no doubt part of it, do not underestimate Mr. Schaeffler quoting Hayek. More than anything else, we believe this represents a psychological and cultural step change toward the realities of the future. A more decentralized and freer world.
If you want to track how close we are to the next financial collapse, there is one number that you need to be watching above all others. The number that we are talking about is the yield on 10 year U.S. Treasuries, because it affects thousands of other interest rates in our financial system. When the yield on 10 year U.S. Treasuries goes up, that is bad for the U.S. economy because it pushes long-term interest rates up. When interest rates rise, it constricts the flow of credit, and a healthy flow of credit is absolutely essential to the debt-based system that we live in.