Wall Street Journal

Debt, Distraction, Currency Wars, Itchy Fingers

According to Austrian economists like Dr. Skousen, consumption and consumer spending are not the main drivers of economic growth. What really drives an economy are investments and innovation from businesses.

“The game is rigged, the network is bugged, the government talks double-speak, the courts are complicit and there’s nothing you can do about it.”

All Good Things Must End... this may not be the end of the world exactly. But the end of the fiat money system President Nixon gave birth to in 1971... when he cut the dollar loose from gold. And it may feel like the end of the world, because of the social chaos it will provoke.

Currently, a new form of danger arises. The Keynesian pettifoggers at the Fed have painted themselves into an epochal corner. After 78 months of ZIRP they have no idea about how and why they got here; and now, mired deep in the lunacy of free money, they are clueless about where they are going next. There is not a chance the US economy has decoupled from the rest of the world. The great credit-driven boom was universal and fueled by out of control central banks. Now comes the bust phase, and these same money printing central bankers have no clue what to do about it.

The transparent truthlessness of the Fed’s basic premises go far to explain the chasm between official policy and reality - though it does not explain the appetite for plain lying of the supposedly informed minority cohort of the public, the deciders among us in business, politics, and media. Within th enext few months (between "patient" removal, token rate hikes, and reversals to QE4), the Fed will be completely out of cred. This will be the biggest disaster of all, since the loss of faith in august institutions will rage through every polity in the advanced economies. Nobody will believe any longer in anything they say or do, and especially the value of the papers (or digits) they denominate as money.

Since Jeb Hensareling is opening a criminal probe into the Fed for leaking material, non-public information because Congress is “committed to holding the Federal Reserve accountable for its actions and omissions, and to ensuring transparency in its operations”, it is also time to finally hold none other than former Treasury Secretary and then-Fed Vice Chairman Tim Geithner criminally accountable for his actions.

The endgame of communist rule in China has begun, and Xi Jinping’s ruthless measures are only bringing the country closer to a breaking point...

Whether it’s subprime auto lending, Janet Yellen’s “stretched” biotech sector, or corporate credit, bubbles abound in today’s fragile market. Prem Watsa thinks valuations in one sector are particularly outrageous.

Today's most under the radar news, just as Citigroup was to Congress, and the swaps push out language, so Boeing, that primary recipients of the generosity of America's Export-Import (Ex-Im) Bank, has been caught red-handed drafting the rules of none other than the Ex-Im bank itself! According to the WSJ: "when the Export-Import Bank sought to respond to critics with tighter rules for aircraft sales, it reached out to a company with a vested interest in the outcome: Boeing Co., the biggest beneficiary of the bank’s assistance." Or nothing more than a criminal conflict of interest, which, once again, is at the expense of America's infinite bailout piggybank: it's taxpayers.

• Again as first reported here: Record U.S. Oil Glut May Fill Storage, Cut Prices (BBG)
• IEA sees renewed pressure on oil prices as glut worsens (Reuters)
• No EU unanimity on renewing Russia economic sanctions (Reuters)
• Tsipras says Greece doing its part in euro zone deal (Reuters)
• ECB Set to Buy Fewer Bonds as Price Gains Ease Crunch (BBG)
• These Americans Are Getting Rich Trading Derivatives Banned in the U.S. (BBG)
• U.S. 2015 profits forecast to grow 1.7 percent; oil, dollar are concerns (Reuters) - in a month this will say "decline"
• Manhunt for shooting suspects grinds on in Ferguson, Missouri (Reuters)

Herbalife stock is up over 5% after hours after WSJ reports Bill Ackman (among others) made false statement about Herbalife's business models to regulators - in order to spur investigations into the company and lower its stock price. This comes just months after Ackman kinda-sorta-didn't-really insider-trade in the Allergan 'scam' that we detailed here. We suspect Whitney Tilson (and his Lumber Liquidators positions) is getting a little nervous now... and Carl Icahn is quietly laughing to himself.

Warren Buffett's “financial weapons of mass destruction” - how are you?

The BoJ has now gone full intervention-tard - buying Japanese stocks on 76% of the days when the market opened lower.

Simply put -  the Greek economy still consumes more than it earns. Despite a 25% contraction in its economy, a plunge in domestic consumption and a sharp decline in imports, as WSJ reports, Greece is still exporting less than it imports, i.e. its current account is still negative. The reason... Shipping.