Madison Avenue

First it was Ireland, then the entire UK, then Germany, and gradually it spread to all of Europe (except for France of course, where it was always a delicacy). But it was only once its finally crossed the Alps and made its way to the Swiss factories of Nestle, the world's largest food maker, did the horsemeat scandal truly go global. The FT reports that "the escalating horsemeat scandal has ensnared two of the biggest names in the food industry, Nestlé, the world’s number-one food maker, and JBS, the largest beef producer by sales. Switzerland-based Nestlé on Monday removed pasta meals from shelves in Italy and Spain and suspended deliveries of all processed products containing meat from German supplier, H.J. Schypke, after tests revealed traces of horse DNA above 1 per cent. Nestlé said it had informed the authorities....Nestlé withdrew two chilled pasta products, Buitoni Beef Ravioli and Beef Tortellini from sale in Italy and Spain. Lasagnes à la Bolognaise Gourmandes, a frozen meat product for catering businesses produced in France, will also be withdrawn."

The big story this past week, besides the annual State of the Delusion speech by Barack “It won’t add a cent to the deficit” Obama, was the fate of the passengers on the Carnival Triumph as their skyscraper sized ship was left adrift at sea for days without power. The ordeal at sea of the Carnival Triumph and the leadership displayed by the Carnival management and executive officers is a microcosm of our declining empire. Rather than deal with our reality, Obama chose the Carnival Cruise Line method of public relations - misinformation, denial and delusion. He has embraced the Big Lie concept as if he had created it. Our cruise of illusions and delusions is headed for troubled water. The math challenged citizens on this ship have been enjoying the 24 hour pizza buffet without the labor required to pay for the bounty. This voyage is reaching an end and the bill is coming due. The engine is on fire but the captain is telling us all is well. Eventually, everyone will know the captain lied.

• Foreign Hostages Die in Algeria’s Battle With Terrorists (Bloomberg)
• The latest bank to soon join the currency wars: McCafferty Says BOE Must Keep Open Mind on New Policy Tools (Bloomberg)
• US debt talks complicated by timing (FT)
• BOJ eyes open-ended asset buying, agrees new inflation goal (Reuters)
• AmEx Says U.S. Card Income Fell 42% as Loss Provisions Increased (BBG)
• Call to raise age for US’s Medicare (FT)
• Obama Promise to Raise Middle Class Living Already Seen in Peril (BBG)
• China Exits Slowdown as Quarterly Growth Tops Forecasts (BBG) - actually, as new Politburo says to make it appear that way
• Britain to drift out of European Union without reforms (Reuters)
• Republicans weigh interim debt-limit hike (FT)
• Abe's aide says Japan shouldn't fret if yen falls to 100 vs dlr (Reuters) ... and it was 90 just a few days ago
• PBOC May Seek More Liquidity Operations (Dow Jones)

The world makes less sense every day. Little children are randomly slaughtered in their schoolrooms. Corrupt, bought off politicians pander to the lowest common denominator as their votes are only dependent upon who contributed the most to their election campaigns, which never end. Delusional, materialistic, egocentric, math challenged consumers (formerly known as citizens) live for today, enslave themselves in debt, vote themselves more entitlements, and care not for future generations. The alienation and isolation created by our sprawling, automobile dependent, technology obsessed, government controlled, debt financed society has spread like a cancerous tumor, slowly killing our country. The oligarchs will not give up without a fight. Their realization that the Brave New World method of controlling the masses has run its course has convinced them to shift their methods towards Orwell’s 1984 tactics.

It appears that unlike UBS, which enjoys transacting in bulk, and announcing the firing of thousands of bankers en masse concurrent with the flurry of pink slips, its more nimble (but just as LIBOR-troubled) Swiss colleague, Credit Suisse, prefers transacting in the pink slip shadows. Specifically, instead of opting for large-font headlines, Credit Suisse prefers to keep its workers on their toes, and yesterday once again warned 120 unidentified employees in its 1/11 Madison Avenue NY headquarters are about to be laid off via the DOL's WARN website. This is only the fourth time in the past year CS has opted for this stealthy method of motivation, laying off 268 in November 2011, December 2011, October 2012 and now this. Why motivation? Because by keeping the list of unlucky souls who will start getting pink slips as soon as December 30, it is motivating everyone to work far harder and preserve the hope that the bell tolls not for them. Indeed: a truly brilliant employee motivational mechanism.

We find ourselves more amazed than ever at the ability of those in power to lie, misinform and obfuscate the truth, while millions of Americans willfully choose to be ignorant of the truth and yearn to be misled. It’s a match made in heaven. Acknowledging the truth of our society’s descent from a country of hard working, self-reliant, charitable, civic minded citizens into the abyss of entitled, dependent, greedy, materialistic consumers is unacceptable to the slave owners and the slaves. We can’t handle the truth because that would require critical thought, hard choices, sacrifice, and dealing with the reality of an unsustainable economic and societal model. It’s much easier to believe the big lies that allow us to sleep at night. The concept of lying to the masses and using propaganda techniques to manipulate and form public opinion really took hold in the 1920s and have been perfected by the powerful ruling elite that control the reins of finance, government and mass media. How many Americans are awake enough to handle the truth? Abraham Lincoln once said that he believed in the people and that if you told them the truth and gave them the cold hard facts they would meet any crisis. That may have been true in 1860, but not today.

Almost precisely a year ago we posted "268 NY Credit Suisse Employees Learn They Are About To Be Laid Off Via Department Of Labor Website." Now, a year later, irony has struck again, as this time 138 employees from an already substantially trimmed Credit Suisse office in Manhattan, find out courtesy of the DOL's WARN website, but certainly not their HR team who wants everyone as motivated as possible until the "Hammer Hits" day, they have just been made redundant in the critical Christmas bonus season between October and December 29, 2012. Instead now everyone will be undermotivated until they get to learn who gets sacked.  All that is left now are the actual identities of the pink slippees. The only other open question is whether the loss to US Federal and NY State tax revenues and US GDP will be offset by the more broken windows that are increasingly being discounted as a result of the ever rising unemployment and greater social unrest (not to mention part time NYPD jobs especially if sharpshooting is actually involved in their training this time).

Human nature hasn’t changed in centuries. We have faith that humanity has progressed, but the facts prove otherwise. We are a species susceptible to the passions of power, greed, delusion, and an inflated sense of our own intellectual superiority. And we still like to kill each other in the name of country and honor. There is nothing progressive about crashing the worldwide economic system and invading countries for “our” oil. History has taught that there will forever be manias, bubbles and the subsequent busts, but how those in power deal with these episodes has been and will be the determining factor in the future of our economic system and country. Humanity is deeply flawed; the average human life is around 80 years; men of stature, wealth, over-confidence in their superior intellect, and egotistical desire to leave their mark on history, always rise to power in government and the business world; this is why history follows a cyclical path and the myth of human progress is just a fallacy.

Scandal After Scandal, Lie Upon Lie ... What's Going On?

H.L. Mencken was a renowned newspaper columnist for the Baltimore Sun from 1906 until 1948. His biting sarcasm seems to fit perfectly in today’s world. His acerbic satirical writings on government, democracy, politicians and the ignorant masses are as true today as they were then. I believe the reason his words hit home is because he was writing during the last Unraveling and Crisis periods in America. The similarities cannot be denied. There are no journalists of his stature working in the mainstream media today. His acerbic wit is nowhere to be found among the lightweight shills that parrot their corporate masters’ propaganda on a daily basis and unquestioningly report the fabrications spewed by our government. Mencken’s skepticism of all institutions is an unknown quality in the vapid world of present day journalism.

H.L. Mencken understood the false promises of democracy 80 years ago:

“Democracy is also a form of worship. It is the worship of Jackals by Jackasses. It is the theory that the common people know what they want, and deserve to get it good and hard.”

We deserve to get it good and hard, and we will.

Americans have an illogical love affair with their vehicles. There are 209 million licensed drivers in the U.S. and 260 million vehicles. The U.S. has a higher number of motor vehicles per capita than every country in the world at 845 per 1,000 people. Germany has 540; Japan has 593; Britain has 525; and China has 37. The population of the United States has risen from 203 million in 1970 to 311 million today, an increase of 108 million in 42 years. Over this same time frame, the number of motor vehicles on our crumbling highways has grown by 150 million. This might explain why a country that has 4.5% of the world’s population consumes 22% of the world’s daily oil supply. This might also further explain the Iraq War, the Afghanistan occupation, the Libyan “intervention”, and the coming war with Iran. Automobiles have been a vital component in the financial Ponzi scheme that has passed for our economic system over the last thirty years. For most of the past thirty years annual vehicle sales have ranged between 15 million and 20 million, with only occasional drops below that level during recessions. They actually surged during the 2001-2002 recession as Americans dutifully obeyed their moron President and bought millions of monster SUVs, Hummers, and Silverado pickups with 0% financing from GM to defeat terrorism. Alan Greenspan provided the fuel, with ridiculously low interest rates. The Madison Avenue media maggots provided the transmission fluid by convincing millions of willfully ignorant Americans to buy or lease vehicles they couldn’t afford. And the financially clueless dupes pushed the pedal to the metal, until everyone went off the cliff in 2008.

Humans are a flawed species. Our minds are easily manipulated. We don’t like pain. We prefer instant gratification. We are susceptible to mass delusion. We will often choose hope over critical thought. Those with higher IQs will regularly attempt to take advantage of those with lower IQs. Fear and greed are the two motivations used by the minority in power to control and manipulate the majority. The American people have been led astray by a small group of powerful men. We were herded through a door in the wall of perception that promised an American dream of material goods, entitlements and pleasure with no obligations or responsibility to future generations. There is only one choice that can save this country from ruin. Each individual must make a choice to either to continue supporting the manipulative, corrupt status quo or coming back through the Door in the Wall.

“The man who comes back through the Door in the Wall will never be quite the same as the man who went out. He will be wiser but less sure, happier but less self-satisfied, humbler in acknowledging his ignorance yet better equipped to understand the relationship of words to things, of systematic reasoning to the unfathomable mystery which it tries, forever vainly, to comprehend” – Aldous Huxley

The earlier bomb scare at Credit Suisse's 1 Madison Avenue HQ may have been a hoax (or, considering this news, a diversion) but the sneaky announcement that the Swiss bank is preparing to fire 49 employees, once again courtesy of the DOL's appropriately named WARN website, is all too real. And since we are now deep in (lack of) bonus season, expect banking layoff announcements to start popping up daily if not hourly. As for the Unmagnificent 49: goodbye 1, welcome 99.

A few days ago, Citigroup announced it would lay off 4500 bankers around the world, although with nothing more definitive, the bank's employees likely thought that "out of sight means out of mind", especially with the holiday season days away. To their chagrin, our latest favorite website, the Department of Labor's "WARN" site, which usually well ahead of various HR offices will advise New York bank employees how many and which office are going to lay people off. Sure enough, here is Citigroup, with just disclosed plans to fire 413 people, with full breakdown by which offices are to be affected. If you are one of the several hundred to be laid off from the 388/390 Greenwich location, our condolences: fear not - the economy is getting better; after all last week initial claims for unemployment benefits literally tumbled meaning the re-depression is now over. You will be back working in the comfortable confines of infinitely rehypothecated fractional reserve banking in no time.

Why do Banks remain such lousy investments?

1. Is the revenue model fundamentally broken? 
2. Is the capital model fundamentally broken? 
3. Is the risk model fundamentally broken?
4. Is the compensation model fundamentally broken?
5. None of the above?
6. All of the above?

Do I REALLY have to give you the answers to these questions?