Germany Has "Reached Its Limit" On Greek Aid

While Frau Merkel remains beach-bound somewhere, hence the lack of 'Neins' recently, her deputy chancellor Michael Fuchs made it unequivocally clear this morning in a Handelsblatt interview that Germany had "reached the limit of its capacity" over additional EFSF payments to Greece and reiterated the double-whammy that the ESM should NOT receive a banking license and that the ECB should NOT act as "money printing press in disguise" by extending emergency loans and bypassing EFSF/ESM. A decision about whether Greece should be given the second tranche of its loan will not be made until October, after the Troika finalizes its first review of the second rescue program in September. However, BNP Paribas notes that there have been a couple of developments worth noting over the past week and more are likely in the coming weeks.

Belgian National Bank Governor Gets It: Bailing Out Spain "Makes No Sense"

A week ago we explained quite clearly why instead of encouraging self-defeating, short-termist behavior by promising to save Europe's insolvent countries if and when needed, which does nothing to resolves Europe's problems and make it worse in exchange for a brief respite from bond selling, the ECB should be doing precisely the opposite: encouraging local governments to understand that there is no magic bazooka from the central banks. Specifically we said that "this Catch 22 of confounding cause and event can continue seemingly indefinitely, although in reality it can't. Because fundamentally what the bond market does is keep sovereigns "honest" - just as Schauble said a week ago, Spanish yields at 7% are not the end of the world - instead what they are is a signal to the country to get its spending in control in order to reduce its deficit, and fundamentally get its house in order - yes, that means getting government spending to a sustainable level and firing hundreds of thousands of workers, as well as probably raising taxes even more. It also means pain all around, but the pain is inevitable and will only be worse the longer reality is denied." This logic is so clear that only a lifelong economist, PhD or Goldman apparatchik can not grasp it: sadly that accounts for most of the people "in charge." Which is why we were delighted to read that at least one person "gets it" - Belgian national bank governor Luc Coene, the same Belgium that is also the heart of the bureaucratic labyrinth known as the EU, who told Belgium's two largest newspaper that "buying the bonds of these countries would only serve to weaken the ECB and do nothing to resolve underlying issues of competitiveness.  “It makes no sense for the ECB to start financing those countries,” said Mr Coene, “It would only lead to the ECB taking on the whole public debt of Spain and Italy onto its balance sheet." Bingo. And not a moment too soon - we really were starting to pull a Mogatu here.

Guest Post: Is China's Economy Staring Down The Bottomless Pit

All major macro data from China over the last 2 days have been disappointing. The third quarter started on a surprisingly weak note for China despite all the talks (and hope) on stimulus and monetary policy easing. The macro data pretty much confirm our view that economic growth did not reach a bottom in the second quarter as the consensus used to believe. If anything, the economy seems to be worsening somewhat again. We hope that the consensus is (finally) right and that we are wrong. We hope that we will not be repeating the joke that “the consensus is expecting a recovery in next quarter during every quarter”. Unfortunately, we just don’t see that, and we doubt if the government has the willingness at this point to do much more, and we doubt whether the government really has the ability as the market thinks. We do not see convincing signs of recovery (except, perhaps, Wen Jiabao making waves every other week), and we even struggle to see signs of stabilisation. If we see anything, we are seeing a bottomless pit.

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Citi's Buiter On Europe's Bumble And Stumble To Large-Scale Restructuring

While still of the belief that a wholesale disintegration of the European Monetary Union remains a distinct tail-risk event, Citigroup's chief economist Willem Buiter succinctly summarizes his core view as "the euro-area will stumble and bumble towards an eventual resolution." However, that 'final' solution does not look like your grandma's European Union as he expects nothing more than a "continued Monetary Union, probably without Greece, having undergone both major sovereign debt restructurings in the periphery and financial debt restructurings for banks in the periphery and core." Transcribed from a three-minute clip, Buiter eloquently answers three key questions: How is the Euro crisis (and its consequent solution) shaping up? Does Germany have the upper-hand? and What sort of moral hazard issues might we see in the near future? He concludes "we won't have a smooth solution to this crisis."

Michael Parenti: Functions of Fascism and Capitalism's Self Inflicted Wounds

Your Six Step Guide to Global Instability

By Nickolai Hubble, Daily Reckoning.com.au:

When you’re at school, history is just a bunch of stuff that’s already happened. When you enter the real world (after university) history becomes rather useful. Especially if you’re trying to figure out the future. So it’s no coincidence that both Dan Denning and Greg Canavan are history buffs. But there’s one logical progression based on history that they never seem to mention in The Daily Reckoning. And yet it’s one that would have a huge impact on all Australians, let alone their finances.
Here’s the five step process that seems to be repeating over and over again to Global Instability:
1.Boom
2.Stock market crash
3.Economic crisis
4.Currency wars
5.Trade wars
6.War
That description fits 1929-1945, 1999-2003, and 2005-today. So far, we’re at stage 5 – trade wars. The American’s latest salvo has been to slap enormous tariffs on Swedish and South Korean made washing machines.
As for the controversial step 6, could there really be war? To answer that, you have to ponder just how the six steps follow on from each other.
Read More @ DailyReckoning.com.au

An Austrian view on High Frequency Trading

by Martin Sibileau, Mises.ca:

In our last letter, we made some comments on high-frequency trading. Today, we want to briefly analyse, from a macroeconomic perspective, the underlying ideas thrown in its favour, as well as the impact this activity has on the capital markets. Why is this important? Because more than half of the trading volume in equities in the main world exchanges is driven high-frequency trades today (More than 70% of volume in the US exchanges alone).
What is high-frequency trading? We will never exhaustively address this issue here. We recommend that you do your own research on the subject. There are numerous articles on this topic. High-frequency trading (HFT) consists in using sophisticated technology to trade securities. It is highly quantitative, employing algorithms to analyze incoming market data. HF investment positions are held only very briefly, with HF traders trading in and out of positions intraday tens of thousands of times. The important feature is that at the end of a trading day there is no net investment position. Processing speed and access to the exchanges are critical.
HFT strategies can be broadly thought in terms of three main groups: Those that provide liquidity, those that trade headlines and those that trade statistics. The statistical ones are the easiest to understand (at least for us): They are based on technical analysis, correlations. The headline strategies seek to profit from momentum trading, filtering information that describes intra-day action in the exchanges. The so-called liquidity strategies are either based on market making (to profit from bid/ask spreads) or from rebate trading. Operationally, HF traders collectively send millions of orders, the most part of which (we understand above 90%) are cancelled before they are even hit. This often causes delays in the exchanges that receive them, potentially creating arbitrage opportunities in those stocks that trade in multiple exchanges.
Read More @ Mises.ca

Gold Bears In Trouble As Central Banks Continue Buying

from KingWorldNews:
With market participants eagerly waiting to see if gold and the mining shares will have a major breakout during the month of August, today King World News interviewed 25 year veteran Caesar Bryan over at Gabelli & Company, which has over $31 billion under management. Here is what Ceasar had to say regarding the gold market, Europe, the US, and mining shares: “The gold price has continued to trade over $1,600 as of late. It seems to be putting in higher lows since May, and I would expect the gold price to perform pretty well as the summer ends and we come into the seasonally strong time in autumn.”
“Meanwhile, we’ve had the news that the Korean Central Bank has added 16 tons of gold to their reserves. But the key here is we can now emphatically state there is absolutely no question that central banks now, on dips, want to add to their reserves.
We also have other key central banks around the world continuing the policy of debasing their currencies, and this continued debasement is a clear signal to these other central banks to keep on accumulating gold. This has to be troubling to the gold bears. The bears have made repeated attempts to break down the gold price, but all attempts have failed.
Ceasar Bryan continues @ KingWorldNews.com

Austerity Hastens Economic Decline

by Stephen Lendman, SJLendman.Blogspot.com:
Obama and other Western leaders face Depression conditions. Roosevelt addressed them in the 1930s. Imagine how austerity then would have imposed greater hardships.
Instead Americans got Social Security, homeowners loan refinancing, and moratoriums on foreclosures. Small farmers were helped unlike current subsidies earmarked for agribusiness.
Farm credit provided refinancing help. Doing so let many stay solvent and survive.
Unemployment insurance was established in partnership with states. Jobless workers got help. Now they’re being told go find a job. We won’t help you. More on that below.
FDR’s alphabet soup of programs created jobs. Civilian Conservation Corps (CCC) workers built public infrastructure and worked on other projects.
Civilian Works Administration (CWA), National Industrial Recovery Act (NIRA), Public Works Administration (PWA), Works Progress Administration (WPA), Tennessee Valley Authority (TVA), and other federal initiatives put millions back to work.
Despite hard times, people got help. So did America. Accomplishments were impressive.
Read More @ SJLendman.Blogspot.com

EDITORIAL: The Civil War of 2016

U.S. military officers are told to plan to fight Americans
from The Washington Times:
Imagine Tea Party extremists seizing control of a South Carolina town and the Army being sent in to crush the rebellion. This farcical vision is now part of the discussion in professional military circles.
At issue is an article in the respected Small Wars Journal titled “Full Spectrum Operations in the Homeland: A ‘Vision’ of the Future.” It was written by retired Army Col. Kevin Benson of the Army’s University of Foreign Military and Cultural Studies at Fort Leavenworth, Kan., and Jennifer Weber, a Civil War expert at the University of Kansas. It posits an “extremist militia motivated by the goals of the ‘tea party’ movement” seizing control of Darlington, S.C., in 2016, “occupying City Hall, disbanding the city council and placing the mayor under house arrest.” The rebels set up checkpoints on Interstate 95 and Interstate 20 looking for illegal aliens. It’s a cartoonish and needlessly provocative scenario.
The article is a choppy patchwork of doctrinal jargon and liberal nightmare. The authors make a quasi-legal case for military action and then apply the Army’s Operating Concept 2016-2028 to the situation. They write bloodlessly that “once it is put into play, Americans will expect the military to execute without pause and as professionally as if it were acting overseas.” They claim that “the Army cannot disappoint the American people, especially in such a moment,” not pausing to consider that using such efficient, deadly force against U.S. citizens would create a monumental political backlash and severely erode government legitimacy.
The vision is hard to take seriously. As retired ArmyBrig. Gen. Russell D. Howard, a former professor at West Point, observed earlier in his career, “I am a colonel, colonels write a lot of crazy stuff, but no one listens to colonels, so I don’t see the problem.”
Read More @ WashingtonTimes.com

Currency Wars

from NewsmaxTV:
 
Information from this investigation has already been shared with the Pentagon, CIA, Congress, and the Treasury. The findings from what you’re about to view suggest that our government, our economy, and your wealth may soon fall victim to a devastating and incomprehensible assault from the rise of Currency Wars.

The Empire State Vixen Index And Other Befuddled Ironies

from Testosterone Pit.com:
We’ve all heard about Wall Street employees who lost their jobs and ended up doing something unrelated, chasing after a dream, starting up a software company, working on a crab boat, teaching English to immigrants, run a taco truck, become a pole dancer….
So the other day, as I was flying home from the East Coast, I sat next to a girl of maybe 20. She raved about her newest thing: a course in sustainable agriculture in Vermont. She lived in New York City, but for six months, she’d be on this training farm, do farm work, and learn the ins and outs of sustainable agriculture. Her dream was to become an urban farmer. She’d rent some rooftop at a commercial building in Brooklyn, have someone install the necessary modifications to accommodate soil, etc., and then she’d plant her seeds. Did she have a farming background? She laughed. She had an Ivy-league degree, worked for a hedge fund for nine years, but wanted to do something else. She probably wasn’t 20 anymore.
But it made me think: there should be indices that measure these activities—the number of people undergoing sudden, drastic, and unlikely career changes, voluntary or not—to give us a better gauge of the real economy and the job market. But by the time I got off my last flight at 1 a.m., I’d forgotten about it….
Read More @ TestosteronePit.com

Once again DHS orders hundreds of millions of rounds of ammo

from EndtheLie:

The federal government, specifically the Department of Homeland Security, is buying up huge amounts of ammunition and there seems to be no end in sight.

Confirmed: New Nationwide “Trapwire” Surveillance System Is Actively Recording, Monitoring Everything

by Mac Slavo, SHTFPlan:

If you didn’t believe that everything you do is monitored before today, this latest confirmation should seal the deal. The information, of course, was not officially released, but when hackers gained access to highly secure emails at global analysis firm Stratfor earlier this year the cat came out of the bag.
With New York recently launching an all-seeing domestic awareness system, many Americans who don’t live in Mayor Bloomberg’s police state believe they are safe from the watchful eye of Big Brother.
Thing again:

Former senior intelligence officials have created a detailed surveillance system more accurate than modern facial recognition technology — and have installed it across the US under the radar of most Americans, according to emails hacked by Anonymous.
Read More @ SHTFPlan.com

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