Wall Street Journal
First, the Obama administration showed during the course of the GM and Chrysler bankruptcy proceedings, that when it comes to Most Preferred Voter classes, some unsecured creditors - namely labor unions, and the millions of votes they bring - are more equal than other unsecured creditors - namely bondholders, and the zero votes they bring. Five years later we are about to get a stark reminder that under the superpriority rule of a community organizer for whom "fairness" trumps contract law any day, it is now Detroit's turn to make a mockery of the recovery waterfall. As it turns out, bankrupt Detroit is proposing to favor pension funds at roughly double the rate of bondholders to resolve an estimated $18 billion in long-term obligations, according to a draft of a debt-cutting plan reviewed by The Wall Street Journal.
Show this article to anyone that believes that the economy has actually improved in the last 5 years. On Tuesday evening, the President once again attempted to convince all of us that things have gotten better while he has been in the White House. He quoted a few figures, used some flowery language and made a whole bunch of new promises. And even though he has failed to follow through on his promises time after time, millions upon millions of Americans continue to believe him. To say that his credibility is "strained" would be a massive understatement. No, things have not been getting better in America. In fact, they continue to get even worse. The following are 32 statistics that Obama neglected to mention during the State of the Union address...
"Own physical gold because the old system will implode. Those who own paper assets are doomed."
We have all heard what might be termed baloney, codswallop, tripe, bull. Call it what you will, it all boils down to the same old thing, especially when its intention is to deceive the public.
You can't make this sh*t up...
Markets are deteriorating around the world but what could cause a real correction in the markets?
Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble. Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare. Instead they are warning about the horror that could result from falling prices, otherwise known as deflation. Get the kids into the basement Mom... they just marked down Cheerios!
- Winter Storm Expected to Make Northeast Commutes Harder (BBG)
- Invasion of Spanish Builders Angers France Struggling to Compete (BBG)
- Toronto mayor, caught ranting on video, admits drinking a 'little bit" (Reuters)
- IBM's Hardware Woes Accelerate in Fourth Quarter (WSJ)
- Sharp Divisions Come to Fore as Peace Talks on Syria Begin (NYT)
- Afghanistan cracks down on advertising in favor of U.S. troops (Reuters)
- Microsoft CEO Search Rattles Boards From Ford to Ericsson (BBG)
- Banks Sit Out Riskier Deals (WSJ)
- Netflix Seen Reporting U.S. Web Users Reach 33.1 Million (BBG)
Pure speculation, but interesting information.
Tech isn’t exactly booming, but that hasn’t kept “valuations” of tech startups from being pushed into the stratosphere, for the benefit of an elite club.
If you want to get an idea of where the rest of America is heading, just take a trip through the western half of West Virginia and the eastern half of Kentucky some time. Once you leave the main highways, you will rapidly encounter poverty on a level that is absolutely staggering. Overall, about 15 percent of the entire nation is under the poverty line, but in some areas of eastern Kentucky, more than 40 percent of the population is living in poverty. After decades of decline, vast stretches of impoverished Appalachia look like they have been through a war. Those living in the area know that things are not good, but they just try to do the best that they can with what they have.
Krugman frequently accuses his opponents of being stupid and/or evil, when they present a view that he himself advanced in other circumstances. His typical readers would have no idea that Krugman once worried about bond vigilantes, or that his books lay out the standard case for why generous government unemployment benefits might contribute to structural unemployment. No, Krugman has led such typical readers to believe that anyone espousing such views is either a complete idiot - immune to theory and evidence that we’ve had since the 1930s - or is a paid shill who hates poor people.
The Libor manipulation scandal has, as WSJ reports, ensnared at least 17 financial institutions and 22 individuals in a wide-ranging investigation spanning 11 countries and four continents. So far, it has netted at least $5 billion in penalties, with more on the way. The Wall Street Journal has taken the most complete list of allegedly involved parties and mapped an extensive web of 298 reported connections that reveals the depth of the alleged conspiracy from the 'alleged' ringleader Tom Hayes and involving practically ever major bank in the world.
Americans have never had less economic freedom than they do right now. The 2014 Index of Economic Freedom has just been released, and it turns out that the level of economic freedom in the United States has now fallen for seven consecutive years. But of course none of us need a report or a survey to tell us that. All we have to do is open our eyes and look around. At this point our entire society is completely dominated by control freaks and bureaucrats. Our economy is literally being suffocated to death by millions of laws, rules and regulations and each year brings a fresh tsunami of red tape. As you will see below, the U.S. government issued more than 80,000 pages of brand new rules and regulations last year on top of what we already had. Even if we didn't have all of the other monumental economic problems that we are currently facing, all of this bureaucracy alone would be enough to kill our economy.
With no major macro news on today's docket, it is a day of continuing reflection of Friday's abysmal jobs report, which for now has hammered the USDJPY carry first and foremost, a pair which is now down 170 pips from the 105 level seen on Friday, which in turn is putting pressure on global equities. As DB summarizes, everyone "knows" that Friday's US December employment report had a sizeable weather impact but no-one can quite grasp how much or why it didn't show up in other reports. Given that parts of the US were colder than Mars last week one would have to think a few people might have struggled to get to work this month too. So we could be in for another difficult to decipher report at the start of February. Will the Fed look through the distortions? It’s fair to say that equities just about saw the report as good news (S&P 500 +0.23%) probably due to it increasing the possibility in a pause in tapering at the end of the month. However if the equity market was content the bond market was ecstatic with 10 year USTs rallying 11bps. The price action suggests the market was looking for a pretty strong print.