Every nation has a right to defend itself against attack – financial attack just as overt military attack. That is an essential element in the principle of self-determination. Greece, Spain, Portugal, Italy and other debtor countries have been under the same mode of attack that was waged by the IMF and its austerity doctrine that bankrupted Latin America from the 1970s onward. International law needs to be updated to recognize that finance has become the modern-day mode of warfare. Its objectives are the same: acquisition of land, raw materials and monopolies. A byproduct of this warfare has been to make today’s financial network so dysfunctional that nations need a financial Clean Slate.
The West is impotent to prevent Armageddon. It is up to Russia and China, and as Washington has framed the dilemma, Armageddon can only be prevented by Russia and China accepting vassal status. This is not going to happen. Why would any self-respecting people submit to the corrupt West? The hope is that Washington will cause its European vassals to rebel by pushing them too hard into conflict with Russia. If European politicians were to break from Washington’s hegemony and instead represent European interests, Washington would be deprived of cover for its war crimes. The breakdown of the neoconservative unipower model would then be apparent even to Washington, and the world would become a safer and better place.
The transparent truthlessness of the Fed’s basic premises go far to explain the chasm between official policy and reality - though it does not explain the appetite for plain lying of the supposedly informed minority cohort of the public, the deciders among us in business, politics, and media. Within th enext few months (between "patient" removal, token rate hikes, and reversals to QE4), the Fed will be completely out of cred. This will be the biggest disaster of all, since the loss of faith in august institutions will rage through every polity in the advanced economies. Nobody will believe any longer in anything they say or do, and especially the value of the papers (or digits) they denominate as money.
- Greece requests euro zone loan extension, offers big concessions (Reuters)
- Germany Rejects Loan Request Saying Greece Must Meet Conditions (BBG)
- Did the Fed Just Enter the Currency Wars (BBG)
- French consumer prices fall for first time since 2009 (Reuters)
- Oil falls sharply after U.S. crude inventories rise (Reuters)
- High-Speed Firm Virtu Revives IPO Plans (WSJ)
- Fed Tiptoes Into Rate-Hike Debate (Hilsenrath)
- Rajoy’s Nemesis Is Back: Anti-Graft Editor Targets Vote (BBG)
Everything that is broken with the US judicial system, explained with the help of two judges... and why nothing in this broken, corrupt system can ever be fixed until the grand reset finally sweeps every last remnant of the existing farce.
- Germany Sees No Need to Scrap Troika in Overseeing Greek Turnaround (WSJ)
- European markets subdued as Chinese data weighs (Reuters)
- U.S. Oil Workers Strike Enters Second Day as Crude Prices Slide (BBG)
- Oil prices rally above $55 as investors pile in (Reuters)
- Obama Wants a New Tax on U.S. Companies' Overseas Profits (BBG)
- If Trading Bonds Is Hard, Think About Pain When Rates Rise (BBG)
- Julius Baer Braces for Swiss Franc Impact (WSJ)
- Coke, Budweiser win as Super Bowl ad battle gets serious (Reuters)
Despite testifying that she wasn’t informed of the deadly ignition-switch problem until late December 2013, The Wall Street Journal reports that, according to emails it has obtained, GM ordered a half-million replacement ignition switches almost two months before it alerted federal safety regulators to any problems. Who was in charge of GM purchasing at this time? Mary Barra. As WSJ concludes, the switch order, nearly two months before GM told NHTSA of the need for recall in early February, suggests the company took initial concrete action to address the defect, but outside of scrutiny by regulators and vehicle owners.
- Total CEO de Margerie killed in Moscow as jet hits snow plough (Reuters)
- China GDP Growth Rate Is Slowest in Five Years (WSJ)
- Oil at $80 a Barrel Muffles Forecasts for U.S. Shale Boom (BBG)
- Carney Faces Scrutiny on Worst Payments Outage Since 2007 (BBG)
- Ebola crisis turns a corner as U.S. issues new treatment protocols (Reuters)
- Gold Buying Rebounds in India on Diwali Jewelry Sales (BBG)
- China-backed hackers may have infiltrated Apple's iCloud (Reuters)
- Greece Said to Seek Recycling of Bank Funds for Exit (BBG)
- No Happy Ending for Investors in Central Bank Fairy Tale (BBG)
- Ebola Response Strains Hospitals (WSJ)
- Obama, foreign military chiefs, to thrash out Islamic State plans (Reuters)
- Draghi’s ‘Whatever It Takes’ Plan on Trial at EU Court (BBG)
- Too-Big-to-Fail Banks Face Up to $870 Billion Capital Gap (BBG)
- Iran’s Message to World: You Need Us to Fight Islamists (BBG)
- Facing new oil glut, Saudis avoid 1980s mistakes to halt price slide (Reuters)
- Ukraine Grannies Outprice Banks on Hryvnia Black Market (BBG)
- HK police use sledgehammers, chainsaws to clear protest barriers, open road (Reuters)
- Gazprom Quarterly Net Rises 13%, Misses Estimate on Ukraine Debt (BBG)
- Barack Obama's 'vacation from hell' (Politico)
- Russian aid convoy checked; military vehicles mass near Ukraine (Reuters)
- Ukraine Says APCs Entered From Russia to Aid Insurgents (BBG)
- Islamic State Said to Challenge Al-Qaeda for Leadership (BBG)
- Missouri protests calmer after governor puts black police captain in charge (Reuters)
- Finally someone will prove the US is a pyramid scheme (in a 1000 page presentation): Ackman’s Pershing Square Sues U.S. Over Fannie, Freddie (BBG)
- Banks, Financial Firms Load Up on Cheap Debt (WSJ)
- Putin to Meet Finnish President as Threat of Cold War Grows (BBG)
For everyone curious how the market's favorite "balls to the wall" barometer did in the second quarter (which ended 45 days ago), here is the full breakdown.
- Police fire tear gas, stun grenades at Missouri protesters (Reuters)
- Putin’s Pipeline Bypassing Ukraine at Risk Amid Conflict (BBG)
- Russia's Largest Oil Company Seeks $42 billion to Weather Sanctions (WSJ)
- Shells hit central Donetsk, Russian aid convoy heads towards border (Reuters)
- U.S. Tightens Sanctions, Putting More Russian Companies at Risk (BBG)
- How to Blindly Score 43% Profit Overnight in China Stocks (BBG)
- Tears guaranteed: San Diego Pension Dials Up the Risk to Combat a Shortfall (WSJ)
- Euro Recovery Halts as Germany Shrinks, France Stagnates (BBG)
- Billionaire Found in Middle of Bribery Case Avoids U.S. Probe (BBG)
- Hillary Clinton, Barack Obama 'Hug It Out' on Martha's Vineyard (WSJ)
With everyone focused on China as the source of next systemic risk, most forgot or simply chose to ignore Europe, which through Draghi's verbal magic was said to be "fixed." Or at least everyone hoped that the rigged European bond market would preserve the "recovery" illusion a little longer giving the world some more time to reform pretend it is doing something to fix it. Turns out that was a mistake, confirmed earlier not only by the plunge in German Factory Orders which cratered -4.3%, down from 7.7% and below the 1.1% revised, and UK Industrial production which missed expectations of a 0.6% boost, rising only 0.3%, but most importantly Italy's Q2 GDP shocker, which as we reported earlier, dropped for the second consecutive quarter sending the country officially into recession. As a result, European stock markets, Stoxx600, has joined the DJIA in the red for the year while Germany's 2 Year Bund just went negative on aggressive risk aversion, the first time since 2012.
If clichés reflect overly common (if therefore unappreciated) wisdom, then we finally have a good explanation for why risk assets continue to rally. No, there are actually not “More buyers than sellers” – money flows are negative over the last month for both U.S. equity mutual funds and ETFs. And forget about investors “Downgrading on valuation” as stocks climb higher and higher; truth be told, that’s not even really a thing (unless you work on the sell side). Nope, this is a “Flight to quality”, “don’t fight the Fed”, “never short a dull market” environment with “easy comps” from a long rough winter. Want to call a top somewhere around here? Remember that “Markets discount events 6 months in the future.” A “Santa Claus rally” in June? That would fit the one cliché we know is actually the market’s True North: it will do exactly what hurts the most “Smart” investors. And that would be to rally further as the doomsayers double down and the timid cling to their bonds and cash.
We believe ourselves to be credible and intelligent, even though nearly all our working capital, our knowledge, is corrupt and seriously tainted.