The Politicians Have To Stop Doing What They Have Done Since WWII Or "The Markets Will Do It For Them"

In an interview on Bloomberg TV, RDM Financial's Ron Weiner summarizes the thing that keeps him up at night as in over thirty years he has never seen "The fate of the world economy rests so much on politicians." Pointing to the sad reality that since WWII the US has always spent more than it earns, he warns that if the politicians don't make it right, then "the markets will!" The heuristic bias to accept the spending status quo, as for most young-to-middle-aged people 'it has always been this way' - just like rising home prices (whose 'new normal recovery' Bloomberg's Joe Brusuelas admirably destroys with a single-chart of shadow inventory and opacity of bank balance sheets), is so entrenched, thanks to the last sixty years or so of 'growth', that when asked 'if it is possible to cut spending', he replies "you have to!" and if it's not politically possible then once again "the market will take care of it". This brief three minute clip reminds us of the disbelief and head-in-the-sand mean-reverting bias so widespread in developed nations (citizens and politicians) and summarily dismisses it with a reminder that 'it just has to be reasonable men that we elect to do it" - and better that than let the market force their hand.

 

Lieborgate Escalates As Barclays Implicates 'Rest'

In a memo released to Barclays staff, outgoing Chairman Marcus Agius appeared to throw the rest of his Liebor-fixing cohort banks under the bus, noting that "As other banks settle with authorities, and their details become public, and various governments' inquiries shed more light, our situation will eventually be put in perspective" by the fines handed out to other international banks. As Sky News reports, it appears 90 million emails and 1 million voicemails will be made available to the independent body spearheading the Liebor probe - the details of which are being finalized this weekend. While the rest of the memo focused on the restoration of Barclays' reputation and the "trust that has been so badly damaged", they quite clearly hinted at its rivals were likely to be hit with even harder fines that the GBP290 million imposed on Barclays. They add, as if we did not need reminding that "the macro-environment remains febrile, especially in Europe. We have to remain vigilant on balance sheet exposures and risk management. In short, our focus must remain on capital, funding and liquidity; improving returns; and driving income growth." But we can't help but feel a Charles Prince-esque defense coming here that 'everyone was doing it' and while the music still played, we kept 'dancing'.

Visualizing TBTF: The Hub And Spoke Representation Of Modern "Scale Free" Banking

In a few moments we will post a critical analysis by David Korowicz, titled Trade-Off: Financial System Supply-Chain Cross- Contagion: a study in global systemic collapse, arguably one of the best big picture overviews of the New Normal in systemic complexity, which considers the "relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy" and specifically looks at how various "what if" scenarios can propagate through a Just In Time world in which virtually everything is connected, and in which even a modest breakdown in one daisy-chain can lead to uncontrolled systemic collapse via the trade pathways more than ever reliant on solvency, sound money and bank intermediation.To wit: "For example, when the Federal Reserve Bank of New York commissioned a study of the structure of the inter-bank payment flows within the US Fedwire system they found remarkable levels of concentration. Looking at 7,000 transfers between 5,000 banks on an average day, they found 75% of payment flows involved less than 0.1% of the banks and 0.3% of linkages."

And Now Back To Reality And The Impossible Earnings Season Stepfunction

Last week the S&P erased 6 days of consecutive losses in 30 minutes of trading on the back of news that JPMorgan lost at least 25% of its average annual Net Income in one epic trade, and stands to make far fewer profits in the future, even as the regulators are about to fire a whole lot of traders for mismarking hundreds of billions in CDS. This was somehow considered "good news." This being the "new normal" market, where nothing makes sense, and where EUR repatriation as a result of wholesale asset sales by European banks drives stocks higher, we were not too surprised. Sadly, even in the new normal, things eventually have to get back to normal. And that normal will come as corporate earnings are disclosed over not so much over the next 3 weeks, when 77% of the companies in the S&P report Q2 results, but in the 3rd quarter. Why the third quarter? Simple: as Goldman's David Kostin explains, "consensus now expects year/year EPS growth to accelerate from 0% in 2Q, to 3% in 3Q to 17% in 4Q." Sorry, but this is not going to happen...

Welcome To The Future

In the US and Europe we have slowly come to the realization that traditional accommodative economic policies leave, and have left, the real economy limp.  Wildly divided governments don't help, but beyond the fact that western decision making bodies are polarized, it is abundantly clear that the panacea for the global economy is not even on the table right now.  The western world has been thrown into a bout of sovereign game theory, and by the constructs of game theory itself, one country will "win," while everyone else will lose to varying degrees.  But that we are such a highly integrated global economy--the reason the whole world is heading towards recession right now--means that a solution must incorporate every economy around the world.  The current game Europe is playing is bound to fail because if one country gets their way, others lose by definition.

An Absolutely Stunning Development In The Gold Market

from KingWorldNews:

Today King World News is reporting on an absolutely stunning development in the gold market. Acclaimed commodity trader, Dan Norcini, told KWN, “The swap dealers, (which is) a category of relatively large traders and big banks, for the first time on my records, are actually net longs in the gold market.” Norcini also noted, “Even back in 2008, at the height of the credit crisis, when there was a huge change of ownership in the gold market and traders were just jettisoning positions, the swap dealers never made it onto the net long side in the gold market.”
But first, Bill Haynes, President and owner of CMI Gold & Silver, had this to say about what buyers are doing in the gold market: “Eric, in the 70s we talked about hyperinflation. We had 13% inflation. Paul Volcker, appointed by Jimmy Carter, called in when Ronald Reagan took office, and (Reagan) said, ‘You put a stop to inflation!’ Paul Volcker did it.”
Norcini & Haynes continue @ KingWorldNews.com

Greece Flails About, Troika Inspectors Paint “Awful Picture,” Merkel Draws A Line, German Industry & Voters Back Her

Posted by: testosteronepit

Post date: 07/13/2012 - 21:32

Greece's Eurozone exit is almost done.

Dangerous Game: ‘US almost daring Iran to strike first’

from RussiaToday:

The US is piling fresh sanctions against Iran in a bid to crank up the pressure over the country’s nuclear activities. The actions target companies accused of breaching a European ban on buying oil from Tehran.

 

La Fête Nationale

If You're Happy, Not Much Else Matters In Life

Admin at Jim Rogers Blog - 5 hours ago

Being happy, that's the main thing I'm trying to help with. If you're happy, not much else matters in life, at least in my experience. There's various ways to be happy, of course. I'm trying to tell people the things that I have learned. I'm trying to teach them to be curious, independent. It's very hard to think independently, as you probably know. Extremely hard. Most people are not very curious, If they see it on TV, that's what they accept instead of thinking, what's really going on here? I'm teaching readers to be curious, skeptical, independent thinkers. - in BI *Jim Rogers i... more » 

How Jamie Dimon and 'Flexible Accounting' Hid JPM's London Whale Loss

Negative Multiplier On Resource Producers

Admin at Marc Faber Blog - 10 hours ago

When the chinese economy slows down, their demand for raw materials also slows down, prices come down and it has a negative multiplier effect on these resource producers. - in a recent podcast Related: Freeport Mcmoran (FCX), Vale ADR (VALE), Rio Tinto ADR (RIO), Mechel OAO ADR (MTL) * * *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

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fraud: why the great recession

by amagifilms, Silver Doctors:
Free markets are not to be blamed for the Great Recession. On the contrary, its origins rest upon the deep government and central bank intervention in the economy. Through fraudulent mechanisms, this causes recurrent boom and bust cycles: bad policies create phases of irrational exuberance, which are then followed by economic recessions, a result that every citizen ends up suffering from.
I think we live in a modern, technologically advanced Soviet Union actually. I think it’s much more like that. The Central Bank controls everything now. The power has been centralized in the US & Europe at a Federal level.
There are no free markets anymore, just interventions. – Cheviot’s Ned Naylor-Leyland.
Full Feature Film Below:

COMEX Swap Dealers Net Long Gold for Third Time Ever

from Got Gold Report:
HOUSTON — For only the third time in the six years of Commodity Futures Trading Commission (CFTC) disaggregated trader data, commercial futures traders the CFTC classes as Swap Dealers reported a net long position in gold futures on the COMEX bourse in New York.
Source:  CFTC for COT data, Cash Market for gold.  Chart covers the entire disaggregated COT dataset for Swap Dealer gold futures net positions excluding spreading contracts.  A 2-year chart is shown below.
Continued…
Swap Dealers are commercial derivatives traders who primarily trade in the form of swaps in other markets and then hedge those sophisticated positions using futures contracts.
The CFTC requires all large traders to report their open positions as of the close on Tuesday each week and then releases that Commitments of Traders (COT) data to the public, usually the following Friday.
As of Tuesday, July 10, as gold closed on the Cash Market in New York at $1,567.16, Swap Dealer commercial traders reported holding 54,038 gold contracts long and 53,239 short for a combined net long position of 799 lots according to  data released by the CFTC on July 13.
Read More @ GotGoldReport.com

The doom of the LIBOR Rate: THE END OF AN IMPERIAL SYSTEM

by Lyndon H. LaRouche, Jr., LaRouche Pac:
A one-time, virtual British puppet, France’s late President Mitterrand, played a crucial role in destroying the economy of more than western and central Europe from a certain date, through, in effect, the present time. The evidence continues to turn up. The original decision was made when Mitterrand, expressing a certain likeness to the intentions of Napoleon III, implicitly threatened all-out war against Germany, should Germany not submit to the status of becoming a puppet of what would become known as a “Euro” system under British supervision. The change which came to western and central continental Europe, occurred at a moment when the Soviet Union had entered a state of its collapse, during which what had been once East Germany was about to be unified with what was then “West Germany.” France’s President Mitterrand virtually threatened warfare against Germany, lest a free Germany being reunited.
The condition for peace set by Mitterrand, Britain’s Margaret Thatcher, and U.S. President George H. W. Bush, was the elimination of Germany’s sovereignty under what was thence to be know as “The Euro System:” the end of the sovereignty of the respective nations of continental western Europe. The present threat of the disintegration of Western and Central continental Europe, and the British Isles, had actually begun in those moments.
Read More @ LaRouchePac.com

The Real Libor Scandal ~Paul Craig Roberts and Nomi Prins

by Dr. Paul Craig Roberts, PaulCraigRoberts.org:
According to news reports, UK banks fixed the London interbank borrowing rate (Libor) with the complicity of the Bank of England (UK central bank) at a low rate in order to obtain a cheap borrowing cost. The way this scandal is playing out is that the banks benefitted from borrowing at these low rates. Whereas this is true, it also strikes us as simplistic and as a diversion from the deeper, darker scandal.
Banks are not the only beneficiaries of lower Libor rates. Debtors (and investors) whose floating or variable rate loans are pegged in some way to Libor also benefit. One could argue that by fixing the rate low, the banks were cheating themselves out of interest income, because the effect of the low Libor rate is to lower the interest rate on customer loans, such as variable rate mortgages that banks possess in their portfolios. But the banks did not fix the Libor rate with their customers in mind. Instead, the fixed Libor rate enabled them to improve their balance sheets, as well as help to perpetuate the regime of low interest rates. The last thing the banks want is a rise in interest rates that would drive down the values of their holdings and reveal large losses masked by rigged interest rates.
Indicative of greater deceit and a larger scandal than simply borrowing from one another at lower rates, banks gained far more from the rise in the prices, or higher evaluations of floating rate financial instruments (such as CDOs), that resulted from lower Libor rates. As prices of debt instruments all tend to move in the same direction, and in the opposite direction from interest rates (low interest rates mean high bond prices, and vice versa), the effect of lower Libor rates is to prop up the prices of bonds, asset-backed financial instruments, and other “securities.” The end result is that the banks’ balance sheets look healthier than they really are.
Read More @ PaulCraigRoberts.org

How D.C. Became a ‘District of Corruption’

by Kojo Nnamdi, The Washington Post:
Vincent C. Gray’s election as mayor in 2010 was the result in no small measure of his success in tapping a deep well of resentment in the black community over Adrian M. Fenty’s perceived aloofness. Gray was helped along in this effort by Marion Barry.
I wrote in this section at the time that if the template for black mayors who connect with black voters is Barry and Newark’s Sharpe James, who have both served prison terms, then “Vincent Gray needs to hurry up and get himself locked up so he can keep it real, too.”
now regret those words, as prophetic as they appear. I still think that Gray is a decent and thoughtful man, but he stands at the center of a political culture that is corrupt and broken.
At a contentious city council meeting this summer, Barry spoke about the council’s credibility problem and voters’ doubts about the D.C. government. “The stain is deep,” he said. He’s right.
Read More @ The Washington Post.com

Ron Paul on FOX Business: Talks About Nebraska And Speaking at the RNC in Tampa

[Ed. Note: Top comment on YT: "Everyone is so excited about RP "speaking" at the convention. I don't give a s#it. I've heard him speak. I want RP to WIN the damn thing."]
from Matlarson10:

Tavakoli: JPM’s Risky Business

from Jesse’s Café Américain:
 
Read More @ Jesse’s Café Américain:

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