Transparency

A few days ago, Edward Snowden made even fewers friends in the corporate tech community with his Guardian disclosures that "Microsoft Helped The NSA Bypass Its Own Encryption Software, Spy On Its Clients." This promptly got the legal team the MSFT scrambling, and moments ago, the firm's General Counsel Brad Smith posted on MSFT's blog that, guess what, the world's biggest desktop OS maker doesn't give government data encryption keys or customer data. Well... what else were they going to say? Oh yes, repeat "direct acces" 6 times in a blog post, making it all too clear the whole issue is merely about semantics.

• India Joins Brazil to China in Efforts to Tighten Liquidity (BBG)
• Seven dead as police and protesters clash in Egypt (Reuters)
• U.S. senators fail to cut deal, head for showdown on filibuster (Reuters)
• Gasoline Tankers Beating Crude for First Time on Record (BBG)
• Smithfield's China bidders plan Hong Kong IPO after deal (Reuters)
• Bitcoin ETF plan struggles to find support (FT)
• Big Home Builders Gobble Up Rivals Starved for Cash (WSJ)
• Putin wants Snowden to go, but asylum not ruled out (Reuters)
• Zimmerman's lawyer calls prosecutors 'disgrace' to profession (Reuters)
• McDonald’s to bring Big Mac to Vietnam (FT)
• Korean Pilots Avoided Manual Flying, Former Trainers Say (BBG)

In the years 2006 and 2007, the underlying stability of the global economy and the U.S. credit base in particular was experiencing intense scrutiny by alternative economic analysts. A crash was coming, it was coming soon, and most of our society was either too stupid to recognize the problem or too frightened to accept the reality they knew was just over the horizon. Why did 2008 creep up on so many people? Weren’t there plenty of economists out there “preaching to the choir” at that time? Weren’t there plenty of signals? Weren’t there plenty of practical conclusions being made about the future? And yet, the world was left stunned. The truth is, human beings have a nasty habit of ignoring the cold hard facts of the present in the hopes of using apathy as a magical elixir for future prosperity. They want to believe that disaster is a mindset, that it is a boogeyman under their bed that can be defeated through blind optimism. Collapse, from a historical perspective, seems to occur when the searchlights of the individual mind are dimmest, when the threat is the greatest, and when we are most comfortable in our ignorance.

Chinese gold demand, from both individuals and central banks, garnered increasing attention as the gold price rose consistently in the last twelve years. When the gold price declined, many in the West declared the end of gold, but China (along with many other Asian nations) defiantly continued to buy gold and increase their imports. Questions over the legitimacy and transparency of COMEX and the London Gold markets are now becoming louder, especially as increasing numbers of institutions are keen to know what actually backs those contracts. ‘Paper gold’ is on everyone’s lips. As The Real Asset Company notes, Physical gold demand in the most populated country on earth does not seem to be subsiding, yet neither do COMEX and futures volumes generally.

Microsoft helped the NSA to circumvent its encryption to address concerns that the agency would be unable to intercept web chats on the new Outlook.com portal; The agency already had pre-encryption stage access to email on Outlook.com, including Hotmail; The company worked with the FBI this year to allow the NSA easier access via Prism to its cloud storage service SkyDrive, which now has more than 250 million users worldwide; Microsoft also worked with the FBI's Data Intercept Unit to "understand" potential issues with a feature in Outlook.com that allows users to create email aliases; Skype, which was bought by Microsoft in October 2011, worked with intelligence agencies last year to allow Prism to collect video of conversations as well as audio; Material collected through Prism is routinely shared with the FBI and CIA, with one NSA document describing the program as a "team sport".

• Bernanke Supports Continuing Stimulus Amid Debate Over QE (BBG)
• Portugal president wants 'salvation' deal, including opposition (Reuters)
• Egypt has less than two months imported wheat left - ex-minister (Reuters)
• A rise in long-term interest rates is creating challenges and opportunities for the largest U.S. banks. (WSJ)
• BoJ says Japanese economy is ‘recovering’ (FT)
• More Chinese cities likely to curb auto sales (Reuters)
• PC Shipments Fall for 5th Quarter (BBG)
• Property Crushes Hedge Funds in Alternative Markets (BBG)
• New aid gives Greece summer respite before showdown (Reuters)
• Rajoy Punishes Exporters Sustaining Spain’s Economy (BBG)

It can't happen... It can't happen...It can't happen...  It just happened.

Looking at the banners in the massive Egyptian protests last week, we saw many anti-American slogans. Likewise, the Muslim Brotherhood-led government that was deposed by the military last week was very critical of what it saw as US support for the coup. Why is it that all sides in this Egyptian civil war seem so angry with the United States? Because the United States has at one point or another supported each side, which means also that at some point the US has also opposed each side. It is the constant meddling in Egyptian affairs that has turned Egyptians against us, as we would resent foreign intervention in our own affairs. So, successive US administrations over the decades have supported all sides in Egypt, from dictator to demonstrator to military. There is only one side that the US government has never supported: our side.

While it was not surprising that the BOE did nothing to change its rate or QE program, it was surprising (to some) that in the first official statement following the appointment of Goldman's Mark Carney as head of the Bank of England, the bank did mention that forward guidance and intermediate thresholds would likely be considered at the August assessment. Which, of course, is code for expect a major change in monetary policy. And now we also know the date, meaning that some time in August Goldman's latest central bank head will proceed doing what Goldman central bank heads do best: crush currencies in order to boost nominal, not real, returns and ensure another record Goldman bonus pool.

Given the US holiday, markets are likely to be thin today but there are some big news stories floating around at the moment.  If the fast and furious events from the past few days in a revolutionary Egypt bear a striking resemblance to what happened in the spring of 2011, it is because they are strikingly comparable. Only this time, following the ouster of yet another US-supported "leader" by the US-supported military, the country's CDS has normalized at a level that is roughly double where it was two years ago as the implicit backing of the US looks increasingly shaky, following what was yet another bungled foreign policy venture by the Obama administration. But for now, the people are celebrating, just as they did in 2011. One wonders what happens between now and the next coup, somewhere two years (or less) hence. For now focus merely on who controls the Suez - after all that is really all that matters for the US. The other major story of yesterday, Portugal, continues to be in limbo,

A world that deserves what's coming to it.

With June turning out to be an ugly month across most financial markets, Hedge Funds are once again losing money. The losses come on top of the industry’s already weakening reputation thanks to back to back years of underperforming major benchmarks. To try to keep their investors from leaving, many funds are turning to promotions usually reserved for far less glamorous industries.

Whether you like it or not, America, the number of calories packed into fast-food eats are getting harder to ignore. McDonald’s, Subway and Panera Bread - and as of this week, Starbucks - have already begun voluntarily posting calorie counts on their menus, ahead of an anticipated federal mandate requiring all restaurants with more than 20 locations to do so. In the interest of openness and transparency, and as Marketwatch notes, assuming for a moment that you’re less worried about your waistline than about getting the most calories for the least amount of money, here are the highest-calorie menu items at 10 of the nation’s top fast-food restaurants offers the most bang for your buck.

It was roughly four years ago when details surrounding such Goldman SPV deals as Titlos first emerged, that it became clear how for over a decade, using deliberately masking transactions such as currency swaps, Greece had managed to fool the Eurozone into believing its economy was doing far better, and its debt load was far lower than it actually was in order to comply with the Masstricht treaty's entrance requirements. As for the Pandora's Box that was opened following the disclosure of just how ugly the unvarnished truth in Europe is, following the Greek disclosure, leading to the general realization that the European experiment has failed and it is now only a matter of time before its final unwind, any comment here is unnecessary - ths has been widely discussed here and elsewhere over the past several years. Now it is Italy's turn. Overnight, the FT reported that "Italy risks potential losses of billions of euros on derivatives contracts it restructured at the height of the eurozone crisis."

If oil and gas is a profoundly dynamic phenomenon, then so too must be environmental risk and conflicts over natural resources - and we are not getting the full picture from the mainstream media, according to Michael T. Klare, professor of peace and world security studies at Hampshire College. As risks multiply, conventional sources evaporate and we are left with “extreme” energy, renewables may be the only way to avoid war and disaster.