World Bank

Better late than never. All you need to read. 

We pay homage to one of the architects and chief implementors of quantitative easing and discuss the end game for the Fed.

All you need to read and more.

All you need to read.

As a Korean-American, many people expected me support Jim Yong Kim's appointment to the World Bank. Here is why I do not.

I recently wrote an article that addresses the subject of sociopaths and how they insinuate themselves into society. Although the subject doesn't speak directly to what stock you should buy or sell to increase your wealth, I think it's critical to success in the markets. It goes a long way towards explaining what goes on in the heads of people like Bernie Madoff and therefore how you can avoid being hurt by them. But there's a lot more to the story. At this point, it seems as if society at large has been captured by Madoff clones. If that's true, the consequences can't be good. So what I want to do here is probe a little deeper into the realm of abnormal psychology and see how it relates to economics and where the world is heading. If I'm correct in my assessment, it would imply that the prospects are dim for conventional investments – most stocks, bonds and real estate. Those things tend to do well when society is growing in prosperity. And prosperity is fostered by peace, low taxes, minimal regulation and a sound currency. It's also fostered by a cultural atmosphere where sociopaths are precluded from positions of power and intellectual and moral ideas promoting free minds and free markets rule. Unfortunately, it seems that doesn't describe the trend that the world at large and the US in particular are embarked upon. In essence, we're headed towards economic and financial bankruptcy.

European markets are seen trading higher as North America comes to market, with some momentum seen following the release of the forecast-beating German ZEW Survey. An economist from the institution commented that downside risks have decreased significantly over the past month, prompting some risk-appetite in Europe during the morning. Participants were also looking towards the Spanish T-Bill auction with particular focus, but it did not confirm the nation’s worst fears as the auction passed with strong bid/covers, selling to the top of the indicative range. Yields, however, did increase over both lines. As such, the Spanish 10-yr yield has fallen below the key 6% mark and remained below that level for most of the session. Peripheral 10-yr spreads against the German Bund are seen tighter throughout the day, amid some market talk early in the session of domestic accounts buying the paper, however this remains unconfirmed.

All you need to read and more.

Before there was seamless connectivity, before there was one global electronic currency and instantaneous global debt creation, before there was the internet, supply-chain "logistics", World Bank, IMF, and economic hitmen, there were... ships. Because in order to allow modern Ricardian economics to flourish (we would be curious to read some/any scholarly papers probing the failure of Ricardo's theories in a ZIRP regime, unfortunately there are none, as never before has the cost of money been zero essentially until regime end), and before money could be printed with impunity, backed solely by full lack of faith and eroding credit, nations had to actually trade with each other, and money was simply a means to facilitate said trade, which in turn allowed the formation of wealth and subsequent asymmetric power relationships. Needless to say, any nation that imported itself to death would be promptly wiped out by its heretofore friendly neighbors who would simply invade it when the money to buy stuff and to fund armies ran out: sadly TARGET2 was not available during Victorian times. So where are we going with this? Ben Schmidt, a Princeton graduate student, using ship logs has conceived of this tremendous time lapse of every single major known ship route taken by Dutch, Spanish and English vessels during the "age of transition", the period between 1750 and 1850, which set the stage for today's "global economy." The result is a fantastic insight into the early stages of globalization.

All you need to read and some more.

Heading into the US open, European stock markets are experiencing a mixed session with particular underperformance noted once again in the peripheral IBEX and FTSE MIB indices. The Portuguese banking sector specifically is taking heavy hits following overnight news from Banco Espirito di Santo that they are to issue a large quantity of new shares, prompting fears that further banks may have to recapitalize. The financials sector is also being weighed upon by a downbeat research note published by a major Japanese bank on the Spanish banking sector. Elsewhere, the Italian BTP auction was released in a fragmented fashion showing softer bid/covers and the highest yield since mid-January in the only on-the-run line sold today. Similarly to yesterday’s auction, the sale was not quite as poor as some as feared. Italy sold to the top of the range and as such, the Italian/German 10-yr yield spread is now tighter by 13BPS, currently at 361BPS. From the UK, the DMO sold 20-year gilts with a lower bid/cover ratio and a large yield tail, prompting gilt futures to fall by around 10 ticks after the release. Later in the session, participants will be looking out for US PPI data and the weekly jobless numbers.

• Fed's No. 2 Strongly Backs Low-Rate Policy (Hilsenrath)
• World Bank Cuts China 2012 Growth Outlook on Exports  (Bloomberg)
• BlackRock's Street Shortcut: Big Banks Would Be Bypassed With Bond Platform; 'Not Going to Cannibalize' (WSJ)
• George Soros - Europe’s Future is Not Up to The Bundesbank (FT)
• Fed May Have Aggravated Income Inequality, El-Erian Says(Bloomberg)
• Shirakawa Pledges Japan Easing Amid Political Pressure (Bloomberg)
• Spain’s Debt Struggle Opens Door to Sarkozy Campaign Message (Bloomberg)
• Iran Woos Oil Buyers With Easy Credit (FT)
• Syria Pledges to Observe Ceasefire (FT)

• With a 2 Year delay, both FT and WSJ start covering the shadow banking system. For our ongoing coverage for the past 2.5 years see here.
• Trouble in shipping turns ocean into scrapheap (Telegraph)
• First-Quarter Home Prices Down 20.7% in Capital (China Daily)
• Bernanke Says Banks Need Bigger Capital Buffer (Reuters)
• Monti’s Overhaul Can’t Stop Pain From Spain: Euro Credit (Bloomberg)
• Spain Confronts Crisis Threat as Rajoy Seeks Deficit Cuts (Bloomberg)
• Japan’s Noda Announces Anti-Deflation Talks as BOJ Sets Policy (Bloomberg)
• White House makes case for Buffett Rule (CNN)
• Cameron to Make Historic Myanmar Trip (FT)
• 'Time for Closer Ties' With India (China Daily)

Four months ago we presented what was easily the clearest and most undiluted by media propaganda clue about the future of the European experiment, when we noted that even immigrants from places such as Afghanistan and Bangladesh, using Greece as a stepping stone onward to the gateway Shengen country of Italy, no longer have the urge to pursue their European dreams, and instead return home. As Art Cashin explained, "Over the decades, immigrants from Afghanistan, Bangladesh and other poor nations would work their way to Patras. They would stay for days or weeks awaiting a chance to smuggle themselves on to a freighter headed for Italy. Once there, they could make their way north into Europe to find hope and opportunity and maybe a job. Last week his relatives told him that things were changing. The immigrants still come to their way station of Patras (hope still blooms). But now, after a couple of weeks in Greece, they are trying to hop ships going the other way. They are going back home. Life was better, or at least no worse, where they came from and they had friends and family for support back there." It appears that the immigrant boycott is spreading, only this time instead of "discretionary" immigrants, or those that have not been fully assumed by society (think "cheap labor" along America's south, such as California, Texas and Arizona), it is starting to hit the core of the cheap PIIGS labor force: the migrant workforce, and in this case the Albanian diaspora working out of Greece at a fraction of the normal cost. And as one Albanian migrant worker, so critical to keeping the Greek construction sector supplied with cheap jobs puts it, "It looks like there's no money left," he said of Greece. "It all dried up." As a result even the Greek illegal-yet-symbiotic-aliens are giving up and going back home. Yes folks: the "indicators" on the ground are telling us that it is now easier to make money in Albania than in Greece.

(The most) bankrupt countries to bail out bankrupt countries. And taxpayers get to foot the bill.