Reuters

We have no personal experience in the business of false flag terrorism, but we imagine that engineering a successfully staged terror attack to be blamed on innocent or semi-innocent parties with the goal of psychologically manipulating a population requires that one also be an accomplished storyteller.  It demands an avid imagination and an organized sense of foresight.  And, most of all, it requires a consistency of narrative.  Without consistency, the audience’s ability to suspend its disbelief is damaged, and they become disconnected from the fantasy being portrayed. The establishment and the useful idiots they manipulate want to make the “threat” the center of attention, but ultimately, the threat is irrelevant.  There will always be the danger of terrorism and death. True crisis lay in what we refuse to see, and the greatest crisis today is not the bombing of a marathon, but the destruction of our freedoms in the name of “security”.  The bottom line?  Our civil liberties are not up for compromise.  Period.  Shootings, bombs, nukes, nothing!  There is no rationalization that will ever make tyranny a moral enterprise. We are not frightened, and we are not ignorant.  No attack, no matter how heinous, will ever convince us to hand over our freedom.

Those who think back to November 2011 will recall that it wasn't Jon Corzine's wrong way bet on Italian bonds that ultimately led to the bankruptcy of MF Global, well it did in part, but the real Chapter 11 cause was the sudden liquidity shortage due to the way the trades were structured as a Repo To Maturity, where the bank had hoped to collect the carry from the bond coupons, thereby offsetting the nominal repo cost of funding. The kind of deal which is the very definition of collecting pennies in front of a steamroller, as while the funding cost may be tiny and the capital allocated negligible (due to the nearly infinite implied leverage involved when using repo), when the underlying instrument crashes, and the originating counterparty has to fund a massive variation margin shortfall, that is when the shadow transformation cascade triggers an immediate liquidity crisis, which can result in liquidation cascade in a few brief hours. It happened with MF Global, it happened with Lehman too. And, we now learn, it also happened with Italy's most troubled and oldest bank, Monte Paschi (BMPS), whose endless bailouts, political intrigue, depoit runs, and cooked books have all been covered extensively here previously.

It appears, once again, that the government's inept approach to spending 'other people's money' has blown up in their face. As HotAir.com reports, newly obtained documents show the Obama administration was warned as early as 2010 that electric car maker Fisker Automotive Inc. was not meeting milestones set up for a half-billion dollar government loan, nearly a year before U.S. officials froze the loan. Just as with Solyndra, Congress seemed convinced to spend billions of taxpayer money 'investing' in green-tech startups - only to lose everything. Simply put, in our humble opinion, the pattern is explained by the 'monopoly money' perspective we suspect these funds are viewed as in light of Bernanke's inexorable funding of the government's largesse. None other than the great Joe Biden reveled in the news in 2009 that Fisker would re-open a closed GM plant creating jobs, jobs, jobs; it never completed the task and never created one job. When the money isn't yours, 'investing' public funds is oh so easy and it appears, with zero consequence for the decision makers - again. But this story is not over yet, as Fisker heads to Congress looking for the right "financial and stretgic resources" once again.

Things in the US have gotten so bad, not only are most online dealers backlogged weeks and months in advance for most PMs (as the CEO of Texas Precious Metals explained in detail), but respected bullion vaults are also now on the verge of running out of inventory. As Reuters described, "Michael Kramer, president of Manfra, Tordella & Brookes (MTB), a major U.S. coin dealer in New York, has been inundated by orders from existing and new wholesale and retail customers. "It's panic. This is one of the busiest times in quite a while. People think gold's at the lows and they want to take advantage." It was only a matter of time before the last bastion of paper money, London, also succumbed to the soaring demand for physical, and sure enough moments ago Bloomberg reported that the "Britain’s Royal Mint, established in the 13th century, sold more than three times more gold coins this month than a year earlier as prices declined." Sales are more than 150 percent higher than last month, according to Shane Bissett, director of bullion and commemorative coin at the Royal Mint.

Why Have We Lost Our Rights In The New "Post-9/11 World" If The Government Can't Keep Us Safe?  Trillions Of Dollars - And Thousands Of American Lives - Have Been Squandered On Boondoggles And Pork. What The Heck Are We Doing?

• The Inland Empire bubble is back: BMW to Amazon Space Demand Spurs Rush to Inland Empire (BBG)
• Tamerlan Tsarnaev was on classified government watch lists (Reuters)
• Brothers in Boston Bombing Case Said Drawn to Radicalism (BBG)
• Germany Spurns Calls to Loosen Austerity Stance (WSJ)
• Spain poised to ease austerity push (FT)
• What ever happened to France's voice in Europe? (Reuters)
• U.S., South Korea Reach Nuclear Deal (WSJ)
• U.S. Sees No Hard Evidence of Syrian Chemical Weapons Use (BBG)
• RBA Set to Invest Foreign Currency Reserves in China, Lowe Says (BBG)
• FedEx Wins $10.5 Billion Postal Contract as UPS Shut Out (BBG)

It is one thing for the market to no longer pay attention to economic fundamentals or newsflow (with the exception of newsflow generated by fake tweets of course), but when the mainstream media turns full retard and comes up with headlines such as this: "German Ifo Confidence Declines After Winter Chilled Recovery" to spin the key overnight event, the German IFO Business climate (which dropped from 106.2 to 104.4, missing expectations of 106.2 of course) one just has to laugh. In the artcile we read that "German business confidence fell for a second month in April after winter weather hindered the recovery in Europe’s largest economy... “We still expect there to have been a good rebound in the first quarter, although there is a big question mark about the weather,” said Anatoli Annenkov, senior economist at Societe Generale SA in London." We wonder how long Bloomberg looked for some junior idiot who agreed to be memorialized for posterity with the preceding moronic soundbite because this really is beyond ridiculous (and no, it's not snow in the winter that is causing yet another "swoon" in indicators like the IFO, the ZEW and all other metrics as we patiently explained yesterday so even a 5 year old caveman financial reported would get it).

We have been reporting extensively on the terminal disconnect between the paper gold market, which tumbled ten days ago for a variety of reasons, and the physical gold market which one can safely say, has seen a record surge in demand by those who wish to take advantage of the tumbling prices, depleting inventories of gold and silver in virtually all jurisdictions, and leading to the a record purchase of gold in the US mint a week ago as also reported here. Today, we learn that, as expected, none other than the US Mint has officially run out of small denomination gold coins, in this case One-Tenth ounce American Eagle gold bullion coins. We are confident this incontrovertible proof of soaring retail demand for physical will somehow result in JPM or another bullion bank dumping a few extra thousands ounces of paper/electronic gold or silver to further disconnect the paper price from what is actually going on with physical demand. As for the US Mint, first it's fractions of an ounce: look forward to the mint running out of all bullion denominations in the coming days and week, first in gold, then in silver as well.

Asia is seeing a new gold rush. Demand for gold bars, coins and jewellery has soared as bargain hunters try to capitalize on the dip in prices. In Hong Kong and Beijing customers lined up outside banks and jewellery shops to make purchases and in some instances there was not enough physical metal to meet the demand. The Shanghai Gold Exchange’s cash contract hit a new record high yesterday (43 metric tonnes, up from 30.4 on April 19th) while gold coin sales at the U.S. Mint have nearly tripled in April against last month’s figures.  Joni Teves of UBS research said, “Physical markets have responded to the much cheaper gold price levels,” and “our physical flows to Asia have been particularly elevated this week.” Asian investors demand for the physical yellow metal has supported the gold price, rallying it up 8.1% from last week’s low.

• China’s Recovery Falters as Manufacturing Growth Cools (BBG)
• Gloomy eurozone output points to rate cut (FT)
• Limit Austerity, EU appartchik Barroso Says (WSJ)
• Regulators Get Banks to Rein In Bonus Pay (WSJ)
• SEC looks to ease rules for launching ETFs (Reuters)
• Easy come, easy go: U.S. Seizes $21 Million From Electric Car Maker Fisker (WSJ)
• Japan nationalists near disputed isles (Reuters)
• OECD in fresh warning on Japan debt (FT)
• S&P says more than one-third chance of Japan downgrade, cites risks to Abenomics (Reuters)

The liquidity tsunami that started in September of 2012 in the Marriner Eccles building and continued with the BOJ's own epic QEasing expansion three weeks ago, has so far provided the impetus for Europe to kick the can of its inevitable dissolution for a few more months, yet slowly but surely the market is starting to read through the artificial levels implied by Italian and Spanish bonds, driven by recycled ECB funding via bank and repo conduits and of course Japanese carry cash, and rumblings of a return to crisis conditions are back. And as always happens, once the crisis talk is back, so is discussion of a fiscal union. Sure enough, earlier today Germany's Angela Merkel once again reminded everyone just what the stakes are in order to achieve a truly stable, and sustainable European union: nothing short of ceding sovereignty to Germany. And with that we are back to square one, because that has always been the trade off - want a unified, fiscally and monetarily, Europe? You can get it: just bow down to Merkel.

• Turn to Religion Split Bomb Suspects' Home (WSJ)
• The propaganda is back for the 4th year in a row: Spring Swoon Sequel No Reason for Economic Growth Scare in U.S. (BBG)
• Bernanke Jackson Hole Absence Contrasts With Greenspan Adulation (BBG)
• Large economies promise to boost growth (FT)
• Tata Faces Crisis as $20 Billion Spent on Water (BBG)
• U.S. Eyes Pushback On China Hacking (WSJ)
• Fed's Bernanke sees no U.S. inflation risks: Nowotny (Reuters)
• Austerity on Trial With U.S. Versus Europe Amid New Evidence (BBG)
• Eurozone anti-austerity camp on the rise (FT)
• Spain Aims to Soften Budget Cuts (WSJ)
• Japan's Aso Calls Recovery 'Few Years' Away (WSJ)
• BOJ Said to Consider Price Forecast Upgrade (WSJ)

The Fed's Jackson Hole, Wyoming symposium is one of the most sacred of annual Fed meetings: it is here that the Fed has historically hinted at any and all upcoming episodes of major monetary experimentation. As such, presence by the high priests of global monetarism is not only compulsory, it is a circular stamp of approval of the Fed's ongoing status quo-preservation capabilities. Which is why the fact that the man at the top himself, Ben Bernanke, whose term is due to expire just five months after this year's Jackson Hole gathering, will be absent "due to a scheduling conflict", is set to spark a fire of questions, first and foremost of which: is this the sign Bernanke is handing over the suitcase with the printer launch codes to some yet unspecified, second in command? Or, even worse for those addicted to monetary heroin, will Bernanke simply try to put as much distance as possible between himself and the place where (and when) the Fed announces the grand "open-ended" QE experiment is set to begin tapering?

Instead of frightening people away from gold and silver, the takedown of paper gold seems to have had just the opposite effect.  People just can't seem to get enough. The crash of the price of paper gold on Monday has unleashed an unprecedented global frenzy to buy physical gold and silver.  All over the planet, people are recognizing that this is a unique opportunity to be able to acquire large amounts of gold and silver at a bargain price. Will this massive run on physical gold and silver soon lead to widespread shortages of those metals? Premiums over spot prices are rising everywhere already. And once reports of physical shortages of gold and silver become widespread, it is going to absolutely rock the financial world.  But this is what happens when you manipulate free markets - it often has unintended consequences far beyond anything that you ever imagined. The following are 10 signs that the takedown of paper gold has unleashed an unprecedented global run on physical gold and silver...

Update: 87 year old Giorgio Napolitano has been reelected as president of Italy during the 6th consecutive vote. He becomes the first Italian president to serve two terms.

Earlier today the fifth consecutive round of presidential voting in Italy failed to produce the sufficient majority for the country to elect a president courtesy of its fractured political system, especially following the announcement last night from the PD's leader Pier Luigi Bersani that he would quit his post after a president is elected.  More than 440 blank ballots were cast in the fifth ballot today, with the leading vote-getter Stefano Rodota -- the candidate of Beppe Grillo’s 5 Star Movement -- at 210. Shortly thereafter an ingenious solution has emerged: reelect the current figurehead president Giorgio Napolitano for a second consecutive 7 year term so if not a prime minister, Italy, which has devolved into total political chaos since the February 25th inconclusive elections, would at least has a president. There is one problem: Napolitano is 87 years old.