China

The biggest non-event this weekend will be the upcoming peace crack pipe pow-wow between the world's most demented Keynesians when a bunch of bloated politicians and economists (except for their much smarter Brazilian colleagues who will instead be frolicking on Ipanema beach and enjoying the fruits of the most artificially-enhanced population on earth) sit down in Seoul and pretend they can come to some resolution over the globalized attempt to destroy all world currencies all at the same time as trillions in shadow money disappears each and every quarter. If this feels like a deja vu, it is - every single G-20 meeting in recent history has had an underlying FX focus, the result ends up being some token agreement, and the very next day the sell off in the dollar continues, as 20 other banks proceed to buy dollars in an act of futility against Ben Bernanke's death star fiat printer. In other words nothing will change. Even JPMorgan agrees: "On Saturday the G-20 may deliver their first statement on FX, and they may incorporate language which many countries have never collectively endorsed, but such a statement may not change much in practice. The status quo, whereby countries manage a dollar decline as best fits their circumstances as long as they don't deliberately strengthen the dollar, will probably persist for lack of a better option...The euro too would fall initially, since less intervention implies less reserve recycling. It would later rally as the dollar broadly declined." In other words - US middle class, a hotdog in Europe will soon cost about as much as it does in Disney Land.

There is a stampede by 49 alternative energy projects to get approval before massive federal incentives offered by Obama expire at the end of the year. The golden state has set a goal of obtaining 33% of its electric power from alternative sources by 2020, the most ambitious anywhere in the world. Making the state a hot house for new energy technologies that can be exported to the rest of the world. (SPIR), (HOKU), (FSLR), (TSL).

• The real stock rally killer: Analysis: Bush tax cuts might just expire after all (Reuters)
• Bondholder `Immunity' to Losses Challenged as Irish Bail Banks (Bloomberg)
• Fed's Hoenig: Further Easing Poses Risk To Nascent US Recovery (WSJ)
• Fed's Bullard Favors Open-Ended Bond Purchases (MarketWatch)
• Ohio AG: foreclosure probe won't stop post-election (Reuters)
• False expectations: The historic infrastructure investment that wasn’t  (Economist)
• Democrats slam another campaign opponent: China (Reuters)

After repeated admonitions from Larry Summers, Tim Geithner, and even President Obama to engage in more Keynesian stimulus, Germany's Chancellor Angela Merkel firmly rejected those demands and had the gall to suggest that such policies weren't right for Germany. Now she has the last laugh as Germany is recovering and we slip back into recession.

A funny thing happened on the way to the frontrun today as after a huge opening driven by slightly positive relative macro data and NFLX's jizztacular earnings, the market dove on no real discernible news other than maybe investors waking up to just about EVERY FUCKING PIECE OF ECONOMIC DATA released in the last few years (though highly unlikely).

SITUATION: Defense planning efforts in East Asia have been markedly influenced by China's bellicose response to the detention of a Chinese fisherman for ramming a Japanese naval boat in disputed waters.
 
ANALYSIS: The detention generated vituperative reactions from Beijing, out of character from its traditional policy of quiet insistence on territorial claims while building naval capacity. This episode, in conjunction with China's continuing claim of primacy in the South China Sea as a 'core interest', is encouraging increased discussion among its regional neighbors regarding naval collaboration.

"I haven’t taken the time to write about gold in length as of late because quite frankly there is so much quality stuff being written about it at this point. In addition, the understanding of the monetary system and the dangers of fiat money in general is so much better than it was even a year ago. Nevertheless, while the understanding is considerably better it remains poor. While it has become a bit cliché, the statement that “gold is not going up but the dollar is going down” is the most important concept for every investor and indeed citizen to understand at this point. Completely wrapping one’s head around this concept may very well be the difference between economic survival and complete destruction in the years ahead. For when you truly comprehend this notion you stop thinking about gold in terms of its price and you can then make a rational decision about where it is going. Gold is not up 23% this year to $1,345/oz, rather the U.S. dollar has depreciated by 23% versus the world’s neutral money supply, gold. As we all know by now, there is no limit to the amount of money Banana Ben Bernanke can or will print. Thus, gold’s theoretical upside is infinite in a purely paper money world. Once you understand this, you recognize that gold is not the bubble but rather the biggest bubble on planet earth today is the U.S. dollar itself." - Mike Krieger

• Banks Clueless on Foreclosure Mess Severity: Jonathan Weil (Bloomberg)
• New York Fed Faces `Inherent Conflict' in Mortgage Buybacks (Bloomberg) - as we speculated first, the FRBNY gets dragged into this as not pursuing action would be dereliction of fiduciary duties to taxpayers by Maiden Lane
• Geithner suggests major currencies "in alignment": report (Reuters)
• Geithner's Goal: Rebalanced World Economy (WSJ)
• Chinese growth slows to 9.6% (FT)
• On the "cash on the sidelines" BS and on Google's 2.4% effective tax rate (Bloomberg)
• Osborne vows not to backtrack on cuts (FT) as UK unveils dramatic austerity measures  (FT)
• Greek, Portugal Bonds Lead Peripherals Lower After Spanish Sale (Bloomberg)
• We See Totally Surreal Markets (Bob Chapman, h/t John)

• Baltic Dry Index falls for fourth day as rents for all vessel types slide.
• Beige Book: Despite high unemployment and persistent weakness in housing market, consumer spending edges up.
• China’s economy grew 9.6% in Q3 - the smallest gain in a year.
• Euro-zone Oct. composite PMI falls to 53.4 - fresh one-year low.
• US 30-year yields near 1-week low as longer maturities attract.
• Deutsche Bank sells $856.6M in bonds tied to commercial properties.

In view of the blistering Q3 9.6% GDP growth rate, it’s time to increase positions in the Middle Kingdom. Look for cash to rotate out of virile, young emerging markets back into the established BRIC’s. We have blasted through the 200 day moving average, suggesting that this move may have the legs of Secretariat. Rumors of its imminent demise are premature by at least a decade. Jim Chanos, please get out of New York and widen your circle of contacts. (FXI), ($SSEC), (EWZ), (RSX), (PIN).

Part four of David DeGraw book "The Road Through 2012: Revolution or World War III.”: "Now that we have an understanding of how the Global Banking Intelligence Complex ran operations through BCCI, let’s look at how some of BCCI’s key players kept operating after the bank was finally shut down. As discussed in the last chapter, during the 1980s and early ’90s, the CIA worked in partnership with BCCI in what was, at the time, the agency’s largest covert operation ever, pumping an estimated $10 billion into funding the Afghan Mujahideen. Through this operation, Osama bin Laden’s al Qaeda network was formed. Bin Laden had accounts in BCCI and ran CIA/BCCI-funded camps."

Canada's pension system is one of the best in the world, though there is room for improvement. Overall, the pension experts judged the US system, as well as those in the UK and Canada, as less sustainable than just a year ago, when they conducted their first joint international study.

While it will have no bearing on your trading today or probably tomorrow, the following story will drive the economic future for years. I have been warning for a while about currency wars, trade wars, and civil or outright good old fashion wars... in fact since 2008. 2 out of 3 so far: not bad, and the 3rd one is just about as likely to come as winter follows autumn. - Nic Lenoir

Geithner’s strong dollar comments, China's surprise rate hike, and worries about the U.S. mortgage market led a flight by investors into U.S. Treasuries. Some analysts believe that there may be a currency accord right before the G20 meeting. However, from all indications, China and Geithner appear to be acting under totally separate agendas however “coordinated” they might seem.

A little reality about the job situation in this country is in order. The unemployment rate reported by the Bureau of Labor Statistics and parroted by the mainstream media is currently 9.6%. Once you stop counting people who have given up looking for jobs and “left the workforce”, discouraged workers, marginally attached workers and workers forced to work part-time, you magically get a 9.6% rate. Using the method of measuring unemployment used during the Great Depression and reproduced by www.shadowstats.com, the real unemployment rate is a depression-like 22.5%. The peak unemployment rate during the Great Depression was 25%. There is no doubt that we are in the midst of 2nd Great Depression, but where are the bread lines and the lines of unemployed winding around the corner? No need. This is the electronic Great Depression – iDepression 2.0. Your 99 weeks of unemployment and food stamps are direct deposited into your bank account so that you don’t have to leave the comfort of your McMansion that you haven’t made a mortgage payment on in the last 14 months. There were no credit cards in 1933. Without a job or a house, you needed to move to where there might be a job. Hence the mass migration from the Midwest to California – ala The Grapes of Wrath. Today, a neighbor in a matching McMansion down the street, with the perfectly manicured lawn, could be unemployed for three years and no one would ever know. They could sustain themselves on unemployment payments, food stamps, and credit cards. Welcome to the iDepression 2.0.