Illinois

Obama wants to give middle-class Americans a ‘grand bargain’. Roll up! Roll up! You won’t believe your eyes.

There are certain potential catastrophes that can be so threatening we must take steps to insure ourselves even though the probability of one actually occurring is slim. It’s like keeping a small fire extinguisher under your kitchen sink and hoping you never have to use it. We cannot put our life savings and our family at risk by trivializing dangers potentially on the horizon. While CNBC may want to pooh-pooh the probability of something similar happening in our country, we all know that creating massive amounts of currency out of thin air always results in the currency collapsing, or at the very least being revalued in a way that most of us will suffer from. A prudent investor (particularly one on either side of the cusp of retirement) would do well to take out some insurance. That is generally done by investing in metal, farm land, and other forms of hard assets.

Today, the wealth redistributor par excellence came to us live from an Amazon warehouse in Chattanooga, TN where with dramatically rolled-up sleeves, Obama praised a vision of a full-time middle class to a fulfillment center gathering of racially diverse, part-time workers, thereby concluding "America's Transformation To A Part-Time Worker Society" first observed here in 2010.

If you want to frighten Baby Boomers, just show them the list of statistics in this article.  The United States is headed for a retirement crisis of unprecedented magnitude, and people are woefully unprepared for it.  At this point, more than 10,000 Baby Boomers are reaching the age of 65 every single day, and this will continue to happen for almost the next 20 years.  The number of senior citizens in America is projected to more than double during the first half of this century, and some absolutely enormous financial promises have been made to them. So will we be able to keep those promises to the hordes of American workers that are rapidly approaching retirement?  Of course not. The pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the coming retirement crisis that will shake America to the core.

The Obama "Better Bargain for the Middle Class" roadshow continues. We can only assume in it he desperately tries to find a representative of said class, so far without success. We will spare readers the repetitive oratory streamed by the teleprompter which is a carbon copy from yesterday and cut straight to the money shots.

The SEC alleges that Trendon T. Shavers, who is the founder and operator of Bitcoin Savings and Trust (BTCST), offered and sold Bitcoin-denominated investments through the Internet using the monikers “Pirate” and “pirateat40.”  The SEC alleges that Shavers, who lives in McKinney, Texas, paid 507,148 Bitcoin in investor withdrawals and purported interest payments.  He transferred at least 150,649 Bitcoin to his personal account at an online Bitcoin currency exchange.  Shavers suffered a net loss from his day trading, but realized net proceeds of $164,758 from his sales of 86,202 Bitcoin.  Shavers transferred $147,102 from his personal account at the online Bitcoin currency exchange to accounts he controlled at an online payment processor as well as his personal checking account.  He used this money to pay his rent, utilities, and car-related expenses as well as for food and retail purchases and gambling.

It wasn't exactly like rubbing salt into the wounds of a US population that over the past month has learned it has no electronic communication privacy left, but it was close, when last night the US government's Office of the Director of National Intelligence announced that it was granting the secret FISA court - the same 11 people who decide behind closed doors whose email, phone or browser history is of national interest and thus subject to further "examination" - an extension of its telephone surveillance program. This is one of the two data surveillance efforts by the US (in conjunction with all major private telecom and internet companies) that Snowden leaked about. Why do we know this? Because the Obama administration is suddenly serious about being the most transparent ever: "The ODNI said in a statement it was disclosing the renewal as part of an effort at greater transparency following Snowden's disclosure of the telephone data collection and email surveillance programs." In short: "we will continue spying, but at least we are fully transparent about it."

In testimony yesterday on Capitol Hill before the Senate Banking Committee, Federal Reserve Chairman Bernanke remarked:

“Gold is an unusual asset. It's an asset that people hold as disaster insurance. A lot of people hold gold as an inflation hedge.  But movements of gold prices don't predict inflation very well, actually. But anyway, the perception is that by holding gold you have a hard asset that will protect you in case of some kind of major problem.

A quick look at job creation on a state by state basis shows some very distinct losers, and one very obvious winner: Texas.

"Following a weekend of horrific violence in Chicago in which at least 70 people were shot and 12 killed, this was the wrong move for public safety in Illinois," Democratic Governor Jim Quinn noted as lawmakers overturned his veto to allow Illinois to become the last state in the US to allow residents to carry concealed handguns. As the BBC reports, the governor warned that the new law will allow people to carry guns in pubs and bars (and carry virtual arsenals on their persons), we suspect, if Chi-raq (the slang for the anarchic gang-ridden areas of Chicago) is any example, that this is already occurring en masse in a wide population of the state. Gun rights proponents, meanwhile, celebrated, "this is a historic, significant day for law-abiding gun owners, they finally get to exercise their Second Amendment rights."

There has been much angst over Bernanke's recent comments regarding an "improving economic environment" and the need to begin reducing ("taper") the current monetary interventions in the future.  What is interesting, however, is the mainstream analysis which continues to focus on one data point, to the next, to determine if the Fed is going to continue its interventions.   Why is this so important?  Because, as we have addressed in the past, the sole driver for the markets, and the majority of economic growth, has been derived solely from the Federal Reserve's programs.   The reality is that such analysis is completely useless when considering the volatility that exists in the monthly data already but then compounding that issue with rather subjective "seasonal adjustments." The question, however, is whether such "QE" programs have actually sparked any type of substantive, organic, growth or simply inflated asset prices, and pulled forward future consumption, for a short term positive effect with negative long term consequences? The recent increases in interest rates, combined with still very weak wage growth, higher costs of living and still elevated unemployment is likely to keep the Fed engaged for the foreseeable future as any attempt to remove its "invisible hand" is likely to result in unexpected instability in the financial markets and economy.

• Pretty much as expected from George W. Bush: Edward Snowden ‘damaged’ security (Politico)
• Gotta love the Keynesian-Monetarist religion: True 'Bullievers' Are Still Sweet on Japan (WSJ)
• Canadian Takes Reins at Bank of England (WSJ)
• Egypt streets quiet, political standoff goes on (Reuters)
• Private Banks Leave Switzerland as End of Secrecy Hurts (BBG)
• How Next Debt-Ceiling Fight Could Play Out (WSJ)
• Easy Money Is Still Central (WSJ)
• Lew Says China Needs Market Policies and Stop Spying (BBG) - China replies with the same
• Ireland Preparing Plan to Tap Euro-Area Rescue Fund, Noonan Says (BBG)
• Poll shows strong shift to Australian PM Rudd, new ministry named (Reuters)

... the Complaint charges that MF Global (i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts; (ii) filed false reports with the CFTC that failed to show the deficits in the customer accounts; and (iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation; and that Holdings controlled the operations of MF Global and is therefore liable as a principal for MF Global’s violations of the Commodity Exchange Act and CFTC regulations.

• Stocks Fall With China in Bear Market as Bonds Decline (BBG)
• Russia defiant as U.S. raises pressure over Snowden (Reuters) ...
• and sure enough: Kerry Warns Hong Kong and Russia on Snowden  (WSJ)
• Slow-Motion U.S. Recovery Searches for Second Gear (WSJ)
• PBOC Sees ‘Reasonable’ Liquidity in China’s Financial System (BBG)
• Italy's Berlusconi faces verdict in underage sex trial (Reuters)
• Fed Monetary Course Difficult for a Bernanke Successor to Alter (BBG)
• Another China central bank worry; companies push into lending (Reuters)
• Gold Miner Writedowns at $17 Billion After Newcrest Fallout (BBG)
• Snowden Faces Often-Posed U.S. Fugitive Question: Where to Run? (BBG)

Head of Mainstream News Group: “The Government May Love This [Destruction of the Free Press]. I Suspect That They Do. But Beware The Government That Loves Secrecy Too Much”