Ireland

Just hours after being force to admit that they were hacked (by Russians apparently), an inspector general's report shows that The IRS has rather remarkably continued to pay refunds on hundreds of thousands of fraudulent tax returns in recent years, and sent dozens of checks to the same addresses, including in Eastern Europe and elsewhere. While some progress has been made, $2.3 billion of real US taxpayer's money was wrongfully refunded to fake US taxpayers... but with this new cyber-attack, we suspect that number will soar.

• FIFA Raided by Swiss Authorities in 2018, 2022 World Cup Probe (BBG)
• Companies Send More Cash Back to Shareholders (WSJ)
• Time Warner Cable Deal Stirs Debt Concerns (WSJ)
• Qatar $200 Billion World Cup Under More Scrutiny Amid FIFA Probe (BBG)
• Philippine, Vietnamese troops play soccer and sing on disputed island (Reuters)
• The G-7's Problem: Can the World Deal With a Greek Default? (BBG)
• SocGen Deal for Bache Illustrates Commodity-Trading Woe (WSJ)
• China’s Naval Abilities Test Asia’s Insecurities (WSJ)

"Europe faces the risk of a second revolt by Left-wing forces in the South after Portugal’s Socialist Party vowed to defy austerity demands from the country’s creditors and block any further sackings of public officials", The Telegraph reports. In sum, the reason why concessions (any concessions) to the Greeks are a non-starter in Athens' negotiations with creditors is that the IMF, the European Commission, and most especially Germany, want to send a clear message to any other 'leftist radicals' who may be thinking about using the "one move and the idea of EMU indissolubility gets it" routine as a way to negotiate for breathing room on austerity pledges, will get exactly nowhere and will have a very unpleasant time on the way.

Asked whether he would repeat an assurance he gave in late 2012 that Greece wouldn't default, Wolfgang Schäuble told The Wall Street Journal and French daily Les Echos that “I would have to think very hard before repeating this in the current situation.” To which Moody's had just one thing to add: "there is a high likelihood of an imposition of capital controls and a deposit freeze."

“When you have anti-English, pro-European nationalists in Scotland and anti-European, pro-British nationalists in England, spiced up with a few anti-English, pro-European nationalists in Wales and of course, the anti-each-other, pro-whatever your having yourself, British and Irish nationalists in that blissfully incoherent chunk of Ulster – Northern Ireland, you know you’re not in the old UK." Welcome to new Britain, Europe’s 21st century version of the Balkans!

"The borrowings of governments, households, companies and financial firms have risen in almost every big country around the world since the year 2000, relative to their GDP," The Economist notes. Here, graphed, is the evolution of the world's debt addiction from 2000 to 2014.

With each passing year the currency fell in value to ever more absurd depths until by November 1923 an ounce of gold - which had cost 170 Marks only five years previously - was trading at 87,000,000,000,000 Marks per ounce. Silver saw similar price gains (see chart) - or rather to put it more accurately silver too remained a store of value and maintained purchasing power as the currency collapsed.

With a global population of 7.3 billion this works out out at over $27,200 of debt for every man, woman and child alive today. 

How this will not end badly and ugly is hard to see. As we quoted in an earlier article, the number of foodbanks in Britain went from 66 to 421 in the first 5 years of Cameron rule. How many more need to be added before people start setting cities on fire? Or even just: how much more needs to happen before the Scots have had enough? Very much like the Greeks, the Scots unambiguously voted down austerity. And in very much the same fashion, they face an entity that claims to be more powerful and insists on forcing more austerity down their throats anyway. It seems inevitable that at some point these larger entities will start to crack and break down into smaller pieces. As empires always do. Now, the EU was of course never an empire, there’s just tons of bureaucrats dreaming of that, and Britain is a long-decayed empire.

• Fed's Yellen says met firm at heart of leak probes (Reuters)
• EU Raises Growth Outlook as ECB Counters Greek Threat (BBG)
• Hillary Clinton Takes Hit in WSJ Poll, but Holds Edge Over GOP Rivals (WSJ)
• China stocks slump on tighter margin rules, IPOs; Hong Kong down (Reuters)
• McDonald’s Chief Promises Turnaround in a Restructuring (NYT)
• German Bond Market Selloff Continues (WSJ)
• Vanguard overtakes Pimco’s Total Return following outflows in wake of Bill Gross’s departure (WSJ)
• EU Demands Concessions as Greece Hurtles Toward Deadlines (BBG)
• Junk Bonds Are The New Haven Assets (BBG)

Gillian Tett, markets and finance commentator and an Assistant Editor and former U.S. Managing Editor of the Financial Times, wrote an important and little noticed article last week questioning complacency on the part of European policy makers regarding a Greek default and potential exit or ‘Grexit’. Tett argues that a Greek failure would lead, as Lehman’s did to “wider policy uncertainty: when Lehman failed, the entire paradigm for finance suddenly seemed unpredictable”.

Considering:

1) governments are unable to eliminate deficits
2) global government debt is increasing exponentially
3) 0% interest rates are allowing governments to borrow more to pay off old loans and fund deficits
4) Global growth is declining despite money printing and bailouts And, we've saved the latest and greatest fact for last: as stunning as 0% interest rates sound, the mathematically-challenged-fantasyland called Europe has just one upped everyone by introducing NEGATIVE INTEREST RATES.

Apple is the Ty Cobb of corporate America. Like Cobb, Apple has set some impressive records. Nine years, a trillion dollars in sales, and almost no taxes paid. Apple risks having a legacy of tainted success and isolation.

Why have Apple shares languished in the wake of Monday's top and bottom line beat? We may now have the answer...

With the USDJPY's ascent to 125, 150 and higher having seemingly stalled just under 120, with concerns that the BOJ may not monetize more than 100% of its net debt issuance suddenly surfacing, the BOJ and the Nikkei would take any help they could get. They got just that an hour ago when Fitch downgraded Japan's credit rating from A+ to A, citing lack of sufficient structural fiscal measures in FY15 budget to replace deferred consumption tax increase.