Transparency

Many of the systems we take for granted are historical accidents. Either based on legacy systems hundreds of years old (higher education) or assembled in a short-term, ad hoc fashion (post-1940 national defense/ national security), these systems have expanded into vast patronage systems that are completely out of touch with 21st century needs, costs or realities. The U.S. healthcare system was not planned; it is largely accidental.

For the second time this year, China's GDP deflator turned negative, meaning that in addition to any deliberate misrepresentations, Beijing may also be overstating GDP by way of a statistical shortcoming. Ultimately, they're habitually understating inflation for domestic output which means that "real" GDP is probably less "real" than nominal GDP. 

The LBMA wants to boost transparency and invited the market to suggest improvements including considering a new electronic platform that may lower trading costs and improve efficiency.

While the macro watchers were keenly awaiting China's macroeconomic data dump on Sunday night, which was far worse than reported (as we will show shortly), a just as notable development was taking place in China's microeconomic world, where as the FT reported on Sunday, China's state-owned SinoSteel, the country's second largest importer of iron-ore, and a major miner and steel trader (yes, another commodity trader) was "poised to default on its bonds this week, the latest test of whether Beijing is willing to impose market discipline on national champion companies."

“We are in the throes of a deep depression, and nothing is changing,” a franchise owner wrote in response to a financial survey by Nomura Group that warned "probably 30% of operators are insolvent." One owner went as far as to speculate that McDonald’s is literally “facing its final days.”

Just because no one has ever manipulated, fixed, or otherwise rigged any markets yet, doesn’t mean they won’t try, which why it’s nice to know that honest firms like Goldman are on the job when it comes to watching for any kind of nefarious shenanigans.

"China mustn't tolerate rampant US violations of China's adjacent waters and the skies over those expanding islands. If the US encroaches on China's core interests, the Chinese military will stand up and use force to stop it."

News That Matters

In medicine, they have something called the Hippocratic Oath. It requires physicians to swear to uphold certain ethical standards. In modern fund management, there is no Hippocratic Oath. Whereas doctors are expected to “First, do no harm”, in modern fund management, iatrogenic illnesses hold sway. An iatrogenic illness is one that is caused by the physician himself. Fund management doctors seem to be doing the best they can to kill their own patients. Science has a word for this, too. It’s called parasite. There is a solution to all this insanity.

250,000 Germans marched in Berlin today in protest against the planned "free trade" deal between Europe and the United States which they say is anti-democratic and will lower food safety, labor and environmental standards.  "This is the biggest protest that this country has seen for many, many years," Christoph Bautz, director of citizens' movement Campact told protesters in a speech.

The latest BAC credit and debit card spending data is out and it is not pretty, and not just for the mid-level consumer who, as documented previously, has been tapping out ever since April as the following Gallup consumer spending chart shows but also for the high-end.

"Thanks to President Obama’s leadership and the determination and sacrifice of the American people, we’ve worked our way out of that ditch and put our economy on sounder footing. Now we have to keep going.

To prevent irresponsible behavior on Wall Street from ever again devastating Main Street, we need more accountability, tougher rules and stronger enforcement. I have a plan to build on the progress we’ve made under President Obama and do just that."

Frequent followers of the German public campaign “Repatriate our Gold“ already know how intensively we have been struggling since 2011 (and longer) with Deutsche Bundesbank to finally – after more than 50 years of external storage of Germany’s gold – get credible transparency regarding this matter. Some progress was brought about recently (2012 disclosure of the whereabouts of Germany´s gold by BuBa; 2013 partial repatriation plan announced by BuBa; 2013 and ongoing through 2015 alleged physical repatriation of approximately 200 tons to date – equaling approximately 10% of Germany’s gold abroad). But real proof and transparency is still lacking from Bundesbank’s side!

Like other banks, Deutsche has been caught up in the Libor-rigging scandal, and faces another investigation in Switzerland for suspected price-fixing in the precious metal market.

Gillian Tett, ourselves and many others have warned that Deutsche and its massive derivative book has the potential to be a ”European Lehman Brothers”. Is Deutsche Bank, the largest holder of Warren Buffett’s “financial weapons of mass destruction” derivatives in trouble?

It is erroneous to believe that free traders have been historically in favor of free trade agreements between governments. Paradoxically, the opposite is true. Curiously, many laissez-faire advocates fall into the government-made trap by supporting “free-trade” treaties. The very fact that governments are negotiating in the name of free trade should be suspicious for any libertarian or true advocate of free trade. It’s time for genuine free trade.