Confused why despite numerous rounds of bailouts, a sovereign debt restructuring, an imminent bail-in, and years of so-called austerity, Greek debt is once again "Rising At Its Fastest Rate Since March 2010"? Maybe anecdotes such as the following will put the big picture in context: as reported by the BBC, Greek civil servants will no longer have an additional six days of extra holidays each year. What was the reason for the nearly full week of vacation time? Why using a computer. "The privilege was granted in 1989 to all who worked on a computer for more than five hours a day. However, Reform Minister Kyriakos Mitsotakis, speaking on Greek TV, said the custom "belonged to another era." What is shocking is that nearly four years after the first Greek bailout of May 2010, this custom from "another era" was still active and public workers were happy to partake in its generosity. Ironically, since now the perks from using a computer are no longer there, watch the Greek economy flounder even faster as instead of playing solitaire, Greek finmin workers migrate to playing tic-tac-toe on paper, not to mention using an Abacus to calculate just how much better than the IMF expectations, Greek 2022 debt/GDP will end up being.
Like many Americans since the recession hit, you have likely wondered if relocating to another state would be a good financial move. In this expansive interactive infographic below, we compare just how well each state is fairing in these challenging times. How does your state rank?
Since 2002 the US government has presided over one of the most dramatic financial bubbles of all time: the bubble of the military-industrial complex. (A few will remember that Dwight Eisenhower warned Americans about this in 1961.) This bubble, like all others, will pop, and it looks to be deflating right now - as we have pointed out vociferously. The amounts of money that have been spent in the past decade can only be characterized as obscene. But the point that really matters is this: Military spending is just part of the bubble. The military-industrial-intelligence-law enforcement complex has only a few choices left in front of it. (Aside from rational things, like giving up their immoral and abusive game.)
The following 100-second clip from Nanex represents 4 years of daily trading in the US equity "markets". Each line is a day in the life of quote spam and the y-axis is the volume of quotes... from around 1000/second in 1999, we now see 2 million quotes per second... progress?
Significant monetary stimulus, the end of fiscal austerity, a booming housing market, a cheap dollar, record corporate cash balances... BofAML warns - if the US economy does not significantly accelerate in coming quarters, it never will. Crucially, they note, asset prices will not do as well in the next 5 years, no matter what the “nouveau bulls” say. Central banks will be less generous, corporations less selfish. And when excess liquidity is removed it will get "CRASHy" as we discussed previously. In the meantime, five years after Lehman, Wall Street has soared, but Main Street has soured.
With major (red)deadlines now pushed off until next year and Assad appearing to come out smelling of (slightly tarnished) roses with his 'compromise' agreement with Russia (and the US) to join the chemical weapons treaty, not only is Israel now a major focus but the Syrian rebels - as one might expect - are not happy. As Reuters reports, the head of the opposition Syrian Supreme Military Council said on Saturday a U.S.-Russian agreement to eliminate Syria's chemical weapons was a blow to the two-and-a-half-year uprising to remove President Bashar al-Assad from power. Crucially, General Salim Idris notes that this allows Assad "to escape being held accountable," and, while unverified for now, Idris added, "we have told our friends that the regime has begun moving a part of its chemical weapons arsenal to Lebanon and Iraq. We told them do not be fooled." But another military council official, Qassim Saadeddine, was a little more aggressive: "Let the Kerry-Lavrov plan go to hell. We reject it and we will not protect the inspectors or let them enter Syria."
Following two days of negotiations in Geneva, this morning John Kerry and his Russian counterpart Sergey Lavrov announced they have reached an agreement for a framework on how Syria would destroy its chemical weapons, and would also seek a UN Security Council resolution that would authorize sanctions, but not military action as per Russia's demand, if Assad failed to comply. The diplomats announced on the third day of intense negotiations in Geneva that some elements of the deal include a timetable and how Syria must comply. At a news conference at the Intercontinental Hotel in Geneva, Kerry said the inspectors must be on the ground by November and destruction or removal of the chemical weapons must be completed by mid-2014.
Back in April, we saw that merely asking the local economy minister what Argentina's rate of inflation is, was enough to prematurely terminate any interview and result in a mocking, viral twitter meme. Since then, things for Argentina haven't exactly worked out too well: a recent Appeals court ruling found in favor of Elliott and the holdout bondholders, resulting in a downgrade of the country to CCC+, and leaving it with the possibility of having to fund billions in deferred obligations. "The lawsuit could result in the interruption of payments on bonds currently under New York jurisdiction, or it could prompt Argentina to undertake a debt exchange that we could view as distressed," S&P said in the statement. "There is at least a one-in-three chance of either occurring within the coming 12 months." Of course, to many the fact that Argentina has still not redefaulted is even more surprising. The reason for that is that despite president Fernandez ongoing rose-colored glasses PR campaign, the domestic economy has been deteriorating at an accelerating pace with runaway inflation destroying local purchasing power for years. As a result of the ongoing authoritarian crackdown on not only individual liberties, but economic data, it has gotten to the point that the government is criminally prosecuting anyone who dares to publish independent inflation data.
Five years after the collapse of Lehman Brothers triggered the largest global financial crisis since the Great Depression, outsize banking sectors have left economies shattered in Ireland, Iceland, and Cyprus. Banks in Italy, Spain, and elsewhere are not lending enough. China’s credit binge is turning into a bust. In short, the world’s financial system remains dangerous and dysfunctional. Worse, despite years of debate, no consensus about the nature of the financial system’s problems – much less how to fix them – has emerged. And that appears to reflect the banks’ political power. Unfortunately, despite the enormous harm from the financial crisis, little has changed in the politics of banking. Too many politicians and regulators put their own interests and those of “their” banks ahead of their duty to protect taxpayers and citizens. We must demand better.
As we head for the fateful FOMC announcement on September 18, US data have continued to moderate. Accordingly, the consensus seems to be converging on a $10-15 billion initial reduction in monthly purchases (mostly focused on the Treasury side and less so on MBS) with any 'tightening' talk tempered by exaggerated forward-guidance discussions and the potential to drop thresholds to appear more easy for longer, since as CS notes, assuming Fed policymakers have learned anything in the last four months, they must know that the markets view “tapering” as “tightening,” even though they themselves for the most part do not. Thus, they are going to need to sugar-coat the message of tapering somehow. But as UBS notes, political risks have grown and there is little clarity on the Fed's thinking about the housing market. This leaves 3 crucial surprise scenarios for the FOMC "Taper" outcome.
A few days ago, when we reported that the largest federation of unions, the AFL-CIO, had figured out that Obamacare was not all it was craked up to be and demanded changes be implemented to appease their constituency as pertains to multi-employer group health plans, many wondered if the administration would not simply cave and pass an exemption giving unions a sidedeal at the expense of all other participants. Last night that option was taken off the table when the Obama administration appeared to rule out giving unions a special deal to offer their workers extra ObamaCare subsidies. As AP reports, "on Friday night, the White House said the Treasury Department had issued a letter making clear that it does not see a legal way for individuals in multi-employer group health plans to receive individual market tax credits as well as the favorable tax treatment associated with employer-provided health insurance at the same time."
If Fed governor Jeremy Stein had concerns about a resurgent credit bubble in February when he wrote his warning about "Overheating in Credit Markets: Origins, Measurement, and Policy Responses" then he should certainly not look at the bubbly ferocity that is taking place in the bond world just half a year after his letter failed to make any dent in the yield-chasing animal spirits.
As economist Jesús Huerta de Soto documents in his tour de force Money, Bank Credit, and Economic Cycles, government has played a leading role in fostering this banking fraud for centuries. The state is forever on the search for more resources to carry out its bidding. Cooperation with the leading money-lending institutions was an obvious route for subverting the moral means to wealth creation. Since the days of classical Greece, it was well understood that transactions of present goods fundamentally differed from those involving future goods. In practical terms, deposits for safekeeping were of considerable difference to those made for the strict purpose of lending out and garnering a return. Bankers who misappropriated funds were often found guilty of fraud and forced to pay restitution. In one recorded episode, ancient Grecian legal scholar Isocrates lambasted Athenian banker Passio for reneging on a client’s depository claim. After being entrusted to hold a select amount of money, the sly banker loaned out a portion of the funds in the hopes of earning a profit. When asked to make due on the deposit, the timid Passio pleaded to his accuser to keep the transgression “a secret so it would not be discovered he had committed fraud.”
While we await Obama's response to the Putin NYT op-ed from Wednesday night, the "pen-pal by proxy" pissing contest just got a new contender: the Tea Party's own, and current Heritage foundation president, Jim DeMint. And while DeMint's thesis is certainly admirable, namely that America is exceptional, his argument is that this is due to the... limited power of government!? Jim, and the NSA probably had the same question ahead of us when it was intercepting this letter as it was being transmitted in TCP/IP space and then saved among a plethora of cloud servers, we wonder: wasn't the point to refute Putin, not admit he is correct?
It’s always a good sign for an empire’s fortunes when the commander in chief of the armed forces completely loses the confidence and trust of the troops.