Meltdown

Propaganda, phony fixes and more debt can only cover the widening gap between fiscal reality and official fantasy for so long. So what else besides the potential for another global financial meltdown bears watching in 2014? Here are a few worthy prospects... as we doubt the same illusions and tricks will get the global economy through 2014-2015 unscathed.

It seems US sailors aren't the only ones who three short years after the Fukushima disaster are being stricken by cancers and other radiation-induced diseases. For once, the media blackout surrounding the Japanese nuclear power plant tragedy appears to have crumbled, and at least a portion of the truth has been revealed. Hong Kong's SCMP reports that fifty-nine young people in Fukushima prefecture have been diagnosed with or are suspected of having thyroid cancer. All of those diagnosed were under the age of 18 when the nuclear meltdown occurred in 2011 and while "experts" are divided over the cause, Okuyama University's head of oncology stated "the rate at which children in Fukushima prefecture have developed thyroid cancer... is several times to several tens of times higher [than average]."

December 23rd, 1913 is a date which will live in infamy.  That was the day when the Federal Reserve Act was pushed through Congress.  Many members of Congress were absent that day, and the general public was distracted with holiday preparations.  Now we have reached the 100th anniversary of the Federal Reserve, and most Americans still don't know what it actually is or how it functions.  But understanding the Federal Reserve is absolutely critical, because the Fed is at the very heart of our economic problems. Since the Federal Reserve was created, there have been 18 recessions or depressions, the value of the U.S. dollar has declined by 98 percent, and the U.S. national debt has gotten more than 5000 times larger.  This insidious debt-based financial system has literally made debt slaves out of all of us, and it is systematically destroying the bright future that our children and our grandchildren were supposed to have. The truth is that we do not have to have a Federal Reserve.  The greatest period of economic growth in U.S. history was when we did not have a central bank.  If we are ever going to turn this nation around economically, we are going to have to get rid of this debt-based financial system that is centered around the Federal Reserve.  On the path that we are on now, there is no hope.

Putting Fukushima In Perspective

When the USS Ronald Reagan responded to the tsunami that struck Japan in March 2011, Navy sailors including Quartermaster Maurice Enis gladly pitched in with rescue efforts. But months later, while still serving aboard the aircraft carrier, he began to notice strange lumps all over his body. Testing revealed he'd been poisoned with radiation, and his illness would get worse. And his fiance and fellow Reagan quartermaster, Jamie Plym, who also spent several months helping near the Fukushima nuclear power plant, also began to develop frightening symptoms, including chronic bronchitis and hemorrhaging. They and 49 other U.S. Navy members who served aboard the Reagan and sister ship the USS Essex now trace illnesses including thyroid and testicular cancers, leukemia and brain tumors to the time spent aboard the massive ship, whose desalination system pulled in seawater that was used for drinking, cooking and bathing.

• MOAR: BOJ Said to See Significant Room for More Bond Purchases (BBG)
• Meltdown Averted, Bernanke Struggled to Stoke Growth (Hilsenrath)
• New Mortgages to Get Pricier Next Year (WSJ)
• Republicans to Seek Concessions From Obama on Debt Limit (BBG)
• Hunting for U.S. arms technology, China enlists a legion of amateurs (Reuters)
• Jury Begins Deliberating in Case of SAC Portfolio Manager (WSJ)
• BP to Write Off $1 Billion on Failed Well (WSJ)
• Rajan Unexpectedly Keeps India Rates Unchanged to Support Growth (BBG)
• Thai protesters say they will rally to hound PM from office (Reuters)
• SEC Brings Fewer Enforcement Actions, Slows Early-Stage Probes (WSJ)

Of the 8 "most important ever" FOMC decisions in 2013, this one is undisputedly, and without doubt, the 8th. As Jim Reid summarizes, what everyone wonders is whether today’s decision by the FOMC will have a bearing on a few last-minute Xmas presents around global financial markets. No taper and markets probably breathe a sigh of relief and the feel-good factor might turn that handheld game machine into a full-blown PS4 by Xmas day. However a taper now might just take the edge off the festivities and leave a few presents on the shelves. Given that the S&P 500 has pretty much flat-lined since early-mid November in spite of better data one would have to say that some risk of tapering has been priced in but perhaps not all of it. Alternatively if they don’t taper one would expect markets to see a pretty decent relief rally over the rest of the year. So will it be Santa or Scrooge from the Fed tonight at 2pm EST?

On January 29, 1845, the New York Evening Mirror published a poem that would go on to be one of the most celebrated narrative poems ever penned. The poem was entitled "The Raven," and its star was an ominous black bird that visits an unnamed narrator who is lamenting the loss of his true love... So, with the vision firmly planted in your mind's eye of a man completely out of touch with reality, seeking wisdom from a mysterious talking bird - knowing that there is only one response, no matter the question - Dear Reader, Grant Williams presents a chart whose importance is enormous... simply put, this one chart shows exactly why we are where we are...

Some of the most respected prognosticators in the financial world are warning that what is coming in 2014 and beyond is going to shake America to the core.  Many of the quotes that you are about to read are from individuals that actually predicted the subprime mortgage meltdown and the financial crisis of 2008 ahead of time.  So they have a track record of being right.  Does that guarantee that they will be right about what is coming in 2014?  Of course not.  In fact, as you will see below, not all of them agree about exactly what is coming next.  But without a doubt, all of their forecasts are quite ominous.  The following are quotes from Harry Dent, Marc Faber,  Mike Maloney, Jim Rogers and ten other respected economic experts about what they believe is coming in 2014 and beyond...

A paper currency system contains the seeds of its own destruction. The temptation for the monopolist money producer to increase the money supply is almost irresistible. We are now in a situation that looks like a dead end for the paper money system. After the last cycle, governments have bailed out malinvestments in the private sector and boosted their public welfare spending. Deficits and debts skyrocketed. So will money printing be a constant with interest rates close to zero until people lose their confidence in the paper currencies? Can the paper money system be maintained or will we necessarily get a hyperinflation sooner or later? There are at least seven possibilities...

• Presidential Task Force Recommends Overhaul of NSA Surveillance Tactics (WSJ)
• Monte Paschi's Largest Shareholder Says It Will Vote Against $4.1 Billion Capital Increase (WSJ)
• SAC Reconsiders Industry Relationships—and Its Name (WSJ)
• Icahn’s Apple Push Criticized by Calpers as ‘Johnny Come Lately’  (BBG)
• In Yemen, al Qaeda gains sympathy amid U.S. drone strikes (Reuters)
• Missing American in Iran was on unapproved mission (AP)
• In China, Western Companies Cut Jobs as Growth Ebbs (WSJ)
• U.S. lays out steps to smooth Obamacare coverage for January (Reuters)
• Las Vegas Sands Said to Drop $35 Billion Spanish Casino Proposal (BBG)
• Twitter Reverts Changes To Blocking Functionality After Strong Negative User Feedback (TechCrunch)

We’ve spent the last five decades learning to love our oppression, adoring our technology, glorying in our distaste for reading books, and wilfully embracing our ignorance. Huxley’s vision of a population, passively sleep walking through lives of self- absorption, triviality, drug induced gratification, materialism and irrelevance has come to pass. Only in the last two decades has Orwell’s darker vision of oppression, fear, surveillance, hate and intimidation begun to be implemented by the ruling class. We’ve become a people controlled by pleasure and pain, utilized in varying degrees by those in power. Stay tuned for our modern day Hunger Games after this commercial for your very own Duck Dynasty Chia Pet.

And so it is done (as we detailed here)... and due to be put in place as of April1st 2014 (rather ironically). The 100-plus-pages of rules and regulations prohibit two activities of banking entities: (i) engaging in proprietary trading; and (ii) owning, sponsoring, or having certain relationships with a hedge fund or private equity fund. But the kicker...

"requires banking entities to establish an internal compliance program designed to help ensure and monitor compliance with the prohibitions and restrictions of the statute and the final rule."

Great! Because self-regulation worked so well in the past for the financial services industry.

The United States’ reputation for sound economic policymaking took a beating in 2013. Some of this was warranted; some of it was not. And now a related distorted narrative – one that in 2014 could needlessly undermine policies that are key to improving America’s economic recovery – is gaining traction... to the danger of "government failure."

• With website improved, Obama to pitch health plan (Reuters)
• Joe Biden condemns China over air defence zone (FT)
• Tally of U.S. Banks Sinks to Record Low (WSJ)
• Black Friday Weekend Spending Drop Pressures U.S. Stores (BBG)
• Cyber Monday Sales Hit Record as Amazon to EBay Win Shoppers (BBG)
• Ukraine's Pivot to Moscow Leaves West Out in the Cold (WSJ)
• Investment banks set to cut pay again despite rise in profits (FT)
• Worst Raw-Material Slump Since ’08 Seen Deepening (BBG)
• Democrats Face Battles in South to Hold the Senate (WSJ)
• Hong Kong reports 1st case of H7N9 bird flu (AP)
• In Fracking, Sand Is the New Gold (WSJ)