Hypocrisy as a Weapon
While Eike Batista's collapse from grace may be the poster child for the country, this deep dive into the Latin American economy concludes Brazil’s flaws are clear. Commodity prices have been volatile; global growth has been weak and inconsistent. Brazil can no longer depend on these factors for growth. A closer look reveals that internal conditions are progressively becoming Brazil’s main economic foe. Ironically this is good news as the country is increasingly in a position to take control of its destiny. What is needed is decisive leadership and effective solutions to the long-term problems plaguing the country. Short-term stimulus measures and even supply-side measures such as reduced taxes have clearly not stimulated the economy. Brazil must invest in its own future.
Already, the Chinese have stopped accumulating dollars - preferring safer currencies, infrastructure, hard assets and commodities and of course gold. Even a small amount of Chinese selling could lead to substantial dollar weakness and much higher bond yields plummeting the U.S. into another recession.
People need to be aware that worsening the situation of one class of tax payers is never going to improve the situation of another. The particular wealth tax proposal mentioned by the IMF en passant is odious in the extreme, especially as the wealth to be taxed has already been taxed at what are historically stratospheric rates. It is noteworthy that the alternatives discussed by the IMF for heavily indebted states which are weighed down by the wasteful spending of yesterday appear to have been reduced to 'default' (either outright or via hyperinflation) or 'more confiscation'. How about rigorously cutting spending instead? Lastly, a popular as well as populist target of the self-appointed arbiters of 'fairness' are loopholes, but as we have previously discussed, they are to paraphrase Mises 'what allows capitalism to breathe'. Closing them will in the end only lead to higher costs for consumers, less innovation, lower growth and considerable damage to retirement savings.
- Headline of the day: U.S. Risks Joining 1933 Germany in Pantheon of Deadbeat Defaults (BBG)
- As Senate wrestles over debt ceiling, Obama stays out of sight (Reuters)
- The "Truckers Ride for the Constitution" that threatened to gum up traffic in the capital was a dud as of Friday afternoon (WSJ)
- China New Yuan Loans Top Estimates as Money-Supply Growth Slows (BBG)
- Vegetable prices fuel Chinese inflation (FT)
- China Slowing Power Use Growth Points To Weaker Output Data (MNI)
- London Wealthy Leave for Country Life as Prices Rise (BBG)
- Gulf oil production hits record (FT)
- Every year like clockwork, analysts start out bizarrely optimistic about future results, then “walk down” their forecasts (WSJ)
- Weak Exports Show Limits of China’s Growth Model (WSJ)
We assume it is a coincidence that on the day in which we demonstrate China's relentless appetite for gold, driven by what we and many others believe is the country's desire to have a call option on a gold-backed reserve currency when the time comes, just posted in China's official press agency, Xinhua, is an op-ed by writer Liu Chang in which he decries the "US fiscal failure which warrants a de-Americanized world" and flatly states that the world should consider a new reserve currency "that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States." Of course, if China were serious, and if the world were to voluntarily engage in such a (r)evolutionary reserve currency transition, then all Magic Money Tree theories that the only thing better than near infinite debt is beyond infinite debt, would promptly be relegated to the historic dust heap of idiotic theories where they belong.
Despite stock (not bond) euphoria yesterday that a DC debt ceiling deal was sealed leading to the second largest risk ramp of 2013, last night was spent diffusing the excitement as one after another politician talked back the success of a "non-deal" that Obama rejected, at least according to the NYT. As a result, with both retail sales data and the PPI not being released (and the only data of note the always leaked UMichigan consumer confidence) markets will again be at the behest of developments on Capitol Hill, with some talk from Republicans suggesting a deal as early as today could be possible in an effort to reopen government on Monday. It is entirely possible that talks could continue over the weekend though, which would ensure a gappy open to Asian markets on Monday.
Only a week ago, the consensus among most mainstream economic analysts and even some alternative analysts was that a government shutdown was not going to happen. The Republicans would fold in the shadow of President Barack Obama’s overwhelming drive for socialization, spending would continue to grow unabated, and the debt ceiling would be vaulted yet again to feed the bureaucratic machine with more fiat. Today, there is no consensus, very few people continue to be so blithely self-assured and even the mainstream is beginning to wonder if a much bigger game is afoot here.
Gold may not be money, but the proceeds from selling it sure is, at least to the IMF, which moments ago announced that it has received government approval to "transfer the profits from gold sales low-income countries." Reuters reports that "The International Monetary Fund has received approval from its member nations to transfer the profits from gold sales conducted a few years ago to a fund to help low-income nations, IMF chief Christine Lagarde said on Thursday. "We have just reached the threshold of enough approval from our membership to transfer the existing gold profit to meet the financing needs of our low-income countries," she said at a news briefing opening the fall meetings of the IMF and World Bank." What was left unsaid is that the bailout needs of the high-income countries, once the debt crsisis comes back with a vengeance as it always does - which as the Keynesian uberminds have demonstrated can only be "solved" with more debt, more monetization, and more pent up inflation - will make sure that gold prices jump right back to new highs at which point the IMF can sell another batch of gold to fund the "poor countries" again, and so on, repeating the process until all fiath is extinguished, or until the IMF runs out of gold, whichever comes first.
- Hilsenrath: Tense Negotiations Inside the Fed Produced Muddled Signals to Markets (WSJ)
- Biggest US Foreign Creditors Show Concern on Default Risk (BBG)
- Shutdown Costs at $1.6 Billion With $160 Million Each Day (BBG)
- What default? Republicans downplay impact of U.S. debt limit (Reuters)
- Top Bankers Warn on U.S. Debt Proposal (WSJ)
- India to stick with austerity despite looming election (Reuters)
- Japan's Current-Account Surplus Plunges (WSJ)
- Amazon Wins Ruling for $600 Million CIA Cloud Contract (BBG)
- German Factory Orders Unexpectedly Fall on Weak Recovery (BBG)
- Britain's Higgs, Belgium's Englert win 2013 physics Nobel prize (Reuters)
- Supreme Owner Made a Billionaire Feeding U.S. War Machine (BBG)
Overnight trading over the past week has been a bipolar affair based on algo sentiment about what is coming out of D.C. But which the last session was optimistic for some inexplicable reason that a deal on both the government shutdown and the debt ceiling out of DC was imminent, today any optimism is gone in the aftermath of the latest comments by Boehner on ABC, in which he implied that a US default is not unavoidable and that it would be used as more political capital, as it would be once again blamed on Obama for not resuming negotiations. As a result both global equities and US futures are down sharpy in overnight trading. And since the government shutdown, better known as a retroactively paid vacation, for everyone but the Pentagon (whose 400,000 workers have been recalled from furlough) continues it means zero government economic statistics in today's session with the only macro data being the Fed-sourced consumer credit report at 3 pm. This week also marks the unofficial start of the Q3 reporting season in the US with Alcoa doing the usual opening honous after the US closing bell tomorrow. JPMorgan’s and Wells Fargo’s results on Friday are the other main ones to watch to see just how much in reserves are released to pretend that banks are still making money. As usual, expect disinformation leaks that send the market sharply higher throughout the day, which however will only make the final outcome that much more painful, because as during every US government crisis in the past, stocks have to plunge so they can soar again.
Breaking Bad With Big Bank CEOs: How Bad Bank CEOs Use the Bystander Effect to Dupe Good People Into Working For ThemSubmitted by smartknowledgeu on 09/30/2013 06:09 -0400
This may become the most important article I’ve ever written. But whether it becomes that article or dwells in anonymity is up to you, the reader.
Here is Part Two of our exclusive interview with World Bank Whistleblower Karen Hudes in which I discuss with Ms. Hudes the need to end an immoral fractional reserve banking system that continually drains the wealth of citizens without their consent and without their knowledge.
As Angela Merkel prepares for her third term - in whatever odd coalition that lurches from the election - the following four charts may surprise many that believe in the core European nations' dominance uber alles. As Bloomberg's Niraj Shah notes, Merkel may find rebalancing the German economy, as its reliance on exports increases, harder than ever. The low levels of growth, high trade balances, excepotionally low consumption and homeownership, and growing "shadow" economy all point to a European core that is far from the beacon of stability so many assume it to be.
A SmartKnowledgeU Exclusive Interview with World Bank Whistleblower Karen Hudes: "The World Will Reject Central Bankers"Submitted by smartknowledgeu on 09/11/2013 23:29 -0400
An exclusive SmartKnowledgeU interview with World Bank Whistleblower Karen Hudes, in which we discuss the growing adoption of competitive currencies to fiat such as gold and silver, the reasons why the masses still largely remain ignorant of banking criminality, and the turniing tide against immoral Central Banking activities.