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Guest Post: How Incremental Increases Can Lead To Systemic Collapse





Healthcare insurance illustrates how incremental increases can lead to systemic collapse.

 
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Fact Or Fiction: Hedge Funds To Offer New Perks





With June turning out to be an ugly month across most financial markets, Hedge Funds are once again losing money. The losses come on top of the industry’s already weakening reputation thanks to back to back years of underperforming major benchmarks. To try to keep their investors from leaving, many funds are turning to promotions usually reserved for far less glamorous industries.

 
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The One Problem With Wal-Mart's Recent Hiring Spree





... Is that it is for temporary workers.

 
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Bill Gross To Ben Bernanke: "It's Your Policies That Are Now Part Of The Problem Rather Than The Solution"





On practically every day of the past four years, we have said that it was the Fed's own policies that are causing the ever-deeper systemic weakness in the US (and now global with all central banks going "all in") economy, which in turn forces the Fed to intervene even more aggressively in an attempt to counteract, in turn generating ever more economic weakness, leading to even more intervention, which is why every incremental episode of QE is larger and longer, and why the economic baseline is ever lower in the most perverse feedback loop of the New Normal. Now, it is once again Bill Gross to catch up to Zero Hedge and conclude just this in his latest monthly letter: "It’s been five years Mr. Chairman and the real economy has not once over a 12-month period of time grown faster than 2.5%. Perhaps, in addition to a fiscally confused Washington, it’s your policies that may be now part of the problem rather than the solution. Perhaps the beating heart is pumping anemic, even destructively leukemic blood through the system. Perhaps zero-bound interest rates and quantitative easing programs are becoming as much of the problem as the solution." Which is why there simply is no way out as long as Bernanke stays in.

 
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Frontrunning: May 24





  • The deeper agenda behind "Abenomics" (Reuters)
  • BoJ governor Haruhiko Kuroda promises to stabilise bond market (FT)
  • Obama Sees Sunset on Sept. 11 War Powers in Drone Limits (BBG)
  • Lower CPMs for everyone: FTC Begins Probe of Google's Display-Ad Business (WSJ)
  • Apple’s Tax Magic Leaves Irish Bondholders Unmoved (BBG)
  • Asia Goes on a Debt Binge as Much of World Sobers Up (WSJ)
  • All hail Gazpromia: UK gas supply six hours from running out in March (FT)
  • Spain’s banks face €10bn more provisions (FT) ... and then more, and more, and more
  • Truck strike may have caused Washington state bridge collapse, officials says (Reuters)
  • P&G Says A.G. Lafley Rejoins as Chairman, CEO (BBG)
  • Five Key Things About the SAC Insider Case (BBG)
 
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Frontrunning: May 17





  • Mine union threatens to bring South Africa to 'standstill' (Reuters)
  • Russia Raises Stakes in Syria (WSJ) - as reported here yesterday 
  • Japan buys into US shale gas boom (FT)
  • Bill Gates Retakes World’s Richest Title From Carlos Slim (BBG) - so he can afford a Tesla now?
  • China Wages Rose Sharply in 2012 (WSJ)
  • Regulators Target Exchanges As They Ready Record Fine (WSJ)
  • Citi Takes Some Traders Off Bloomberg Chat Tool (WSJ)
  • After Google, Amazon to be grilled on UK tax presence (Reuters)
  • Apple CEO Cook to Propose Tax Reform for Offshore Cash (BBG)
  • French, German politicians to pressure Google on tax (Reuters)
  • Gold Bears Revived as Rout Resumes After Coin Rush (BBG)
  • A stretched Samsung chases rival Apple's suppliers (Reuters)
 
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Frontrunning: April 26





  • Reinhart and Rogoff: Responding to Our Critics (NYT)
  • Differences with centre-right delay Italy's Letta (Reuters)
  • Italy's Letta moves forward to shape government (Reuters)
  • China’s leaders warn on financial risks (FT)
  • Norway oil fund makes big move from bonds to stocks (FT) - worked wonders for the Bank of Israel
  • Smuggling milk is the new smuggling heroin in HK: Milk Smugglers Top Heroin Courier Arrests in Hong Kong (BBG)
  • RenTec's mean reversion models fail on BOJ lunacy: Yen Bets Don't Add Up for a Fund Giant (WSJ)
  • From 'Fabulous Fab' to Grad Student (WSJ)
  • BOJ in credibility test as divisions emerge over inflation target (Reuters)
  • Boston Bombing Suspect Moved from hospital to prison (WSJ)
  • Provopoulos Says ECB May Never Need to Use Bond-Buying Program (BBG) which is good because, legally, it doesn't exist
 
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David Stockman: The Keynesian Endgame





The breakdown of sound money has now finally generated a cruel endgame. The fiscal and central banking branches of the state have endlessly bludgeoned the free market, eviscerating its capacity to generate wealth and growth. This growing economic failure, in turn, generates political demands for state action to stimulate recovery and jobs. But the machinery of the state has been hijacked by the various Keynesian doctrines of demand stimulus, tax cutting, and money printing. These are all variations of buy now and pay later - a dangerous maneuver when the state has run out of balance sheet runway in both its fiscal and monetary branches. Nevertheless, these futile stimulus actions are demanded and promoted by the crony capitalist lobbies which slipstream on whatever dispensations as can be mustered. At the end of the day, the state labors mightily, yet only produces recovery for the 1 percent.

 
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Frontrunning: April 1





  • Goldman's Mario Draghi convinced Italy president Napolitano not to resign (Reuters)
  • David Stockman Warns of Crash Of Fed-Fueled Bubble Economy (BBG)
  • Cyprian archbishop calls on Central Bank's head, Finance Minister to resign (Voice of Russia)
  • Cyprus Parliament President Says Country Should Exit Eurozone (Zero Hedge)
  • Cyprus seeks to find people behind bank crisis (FT)
  • Argentina sticks to its guns over holdout creditor payments (FT)
  • 40% of all trading is now done in dark pools and off exchanges (NYT)
  • Sequester Impact Remains Elusive (WSJ)
  • China’s Home Prices Increase Most in 26 Months, SouFun Says (BBG)
  • Beijing, Shanghai Add to Home Curbs as China Acts to Cool Market (BBG)
  • Two men die in Shanghai in first human cases of bird flu strain (SCMP)
  • Economics will catch up with the euro  (FT)
  • How much gold is there in the world? (BBC)
  • Fannie Mae Regulator Sets No-Doc Modifications for Borrowers (BBG)
 
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Guest Post: 'Available'





It is clear now that we must have been wrong about the economy. No more proof is needed than the fact the Dow has gone up 1,500 points. Everyone knows the stock market reflects the true health of the nation – multi-millionaire Jim Cramer and his millionaire CNBC talking head cohorts tell us so. Ignore the fact that the bottom 80% only own 5% of the financial assets in this country and are not benefitted by the stock market in any way. It is time to open your eyes and arise from your stupor. Observe what is happening around you. Look closely. Does the storyline match what you see in your ever day reality? It is them versus us. Whether you call them the invisible government, ruling class, financial overlords, oligarchs, the powers that be, ruling elite, or owners; there are powerful wealthy men who call the shots in this global criminal enterprise. No amount of propaganda can cover up the physical, economic, social, and psychological descent afflicting our world. There’s a bad moon rising and trouble is on the way.

 
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Frontrunning: March 13





  • More black smoke over Vatican: No decision on pope in second day (NBC)
  • PBOC Chief Says China Should Be on ‘High Alert’ on Inflation (BBG) - just as predicted last fall
  • California Seizes Guns as Owners Lose Right to Keep Arms (BBG)
  • U.S. Tax Cheats Picked Off After Adviser Mails It In (BBG)
  • In 2012, Samsung spent $401 million advertising its phones in the U.S. to Apple's $333 million (WSJ)
  • Coca-Cola probed over mapping in China (FT) - accused of ‘illegally collecting classified information’
  • Italy's Bond Sale Meets Tepid Demand (WSJ)
  • U.S. Steps Up Alarm Over Cyberattacks (WSJ)
  • Mugabe takes on Zimbabwe's Generation X (Reuters)
  • Mars Rover Finds Conditions Once May Have Supported Life (BBG)
  • Oil demand hit by China refinery outages (FT)
  • Big Sugar Is Set for a Sweet Bailout (WSJ) DOA to buy 400,000 tons of sugar to stave off a wave of defaults by sugar processors
  • Spectre of stagflation haunts UK (FT)
  • As Republicans seek identity, conclave highlights divisions (Reuters)
 
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Guest Post: 16 Signs That The Middle Class Is Running Out Of Money





Is "discretionary income" rapidly becoming a thing of the past for most American families?  Right now, there are a lot of signs that we are on the verge of a nightmarish consumer spending drought.  Incomes are down, taxes are up, many large retail chains are deeply struggling because of the lack of customers, and at this point nearly a quarter of all Americans have more credit card debt than money in the bank.  Considering the fact that consumer spending is such a large percentage of the U.S. economy, that is very bad news.  How will we ever have a sustained economic recovery if consumers don't have much money to spend?  Well, the truth is that we aren't ever going to have a sustained economic recovery.  In fact, this debt-fueled bubble of false hope that we are experiencing right now is as good as things are going to get.  Things are going to go downhill from here, and if you think that consumer spending is bad now, just wait until you see what happens over the next several years. The following are 16 signs that the middle class is rapidly running out of money...

 
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Frontrunning: February 28





  • Grillo kills move to break Italy deadlock (FT)
  • Abe nominates Kuroda to run BoJ (FT)
  • More WMT bad news: Wal-Mart Chief Administrative Officer Mars to Leave: WSJ (BBG)
  • Japan's Abe: Islands Are Indisputably Ours (WSJ) - Except for China of course
  • Low-key departure as pope steps down, to enter the final phase of his life "hidden from the world" (Reuters)
  • Cuts unlikely to deliver promised budget savings (Reuters)
  • European Union caps bankers’ bonuses (FT)
  • White House, Republicans dig in ahead of budget talks (Reuters)
  • Jockeying Stalls Deal on Cuts (WSJ)
  • Argentina Says It Won’t Voluntarily Comply With Bond Ruling (BBG)
  • Italian president says forming new government cannot be rushed (Reuters) - or happen at all
  • Central Banks Spewing Cash Must Plan Exit Timing, Rohde Says (BBG)
  • China Regional Targets Cut in Sign Debt Concerns Heeded (BBG)
  • RBA Says Up to 34 Central Banks Holding Australian Dollars (BBG)
 
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Guest Post: 20 Signs The U.S. Economy Is Heading For Big Trouble In The Months Ahead





Is the U.S. economy about to experience a major downturn?  Unfortunately, there are a whole bunch of signs that economic activity in the United States is really slowing down right now. In many ways, what we are going through right now feels very similar to 2008 before the crash happened.  Back then the warning signs of economic trouble were very obvious, but our politicians and the mainstream media insisted that everything was just fine, and the stock market was very much detached from reality.  When the stock market did finally catch up with reality, it happened very, very rapidly.  Sadly, most people do not appear to have learned any lessons from the crisis of 2008.  Americans continue to rack up staggering amounts of debt, and Wall Street is more reckless than ever.  As a society, we seem to have concluded that 2008 was just a temporary malfunction rather than an indication that our entire system was fundamentally flawed.  In the end, we will pay a great price for our overconfidence and our recklessness.

 
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