It has been a long time since US territory abroad, i.e., a US embassy, was openly attacked. It has been even longer, or about 33 years, since a US ambassador was last killed in the line of duty in 1979 Afghanistan. Both happened last night. Below, courtesy of Reuters, are pictures of the event.
There was little of note in the annual US Census Bureau update titled "Income, Poverty, and Health Insurance Coverage in the United States." The key number everyone hones in on in this report - the number of America living in poverty - is already well known courtesy of foodstamp data. Per the Census bureau this number was 46.2 million Americans in 2011 or "after 3 consecutive years of increases, neither the official poverty rate nor the number of people in poverty were statistically different from the 2010 estimates." Actually this statement is quite wrong as the foodstamp data speaks a very different story, but it is an election year, and most people are mathematically challenged. Either way of looking at it, 15% of the US population living in poverty is hardly a statistic to be proud of, regardless who is president. Which brings us to a second point: when looking at the wealth dispersion by percentile, Wharton economist Justin Wolfers commented that "The rich just keep getting richer." Actually, based on the Census data he was looking at this also is wrong, as the underlying series shows that both the household income of the uber-wealthiest 95th percentile, as well as the income spread between the 95th and 10th percentile, over the past 5 years has actually been going down. In fact, the average income of the richest disclosed percentile is $186,000, or the lowest since 1999. So yes, the rich may be getting richer, but it certainly is not based on Census data, which shows that the wealth of the top percentile has been not only flat but modestly declining for 12 years.
Cui bono--to whose benefit?--is a skeptic's scalpel that cuts through the fat of propaganda and political expediency to the hard truth. Since the world has been trained (in Pavlovian fashion) to hang on every word issued by America's privately owned central bank, the Federal Reserve, it's appropriate to ask a simple but profound question: Who benefits from the Fed's existence and its policies of loaning "free money" to banks at 0% and ZIRP (zero interest rate policy)? The Status Quo's answer is "the American people," of course, a deliciously juicy layer of "Big Lie" propaganda and obfuscation. Any healthy political and financial system would have broken the fraud-based system and dismantled the failed banks en masse in an orderly fashion. One institution stopped this from happening: the Federal Reserve. The Fed exists to serve the banks. Everything else is propaganda. Ever-expanding debt leaves America a nation of wealthy banks and increasingly impoverished debt-serfs. Cui bono, baby.
Moments ago it was Mitt Romney saying a bunch of canned, pre-election stuff. Now it is Obama's turn to say another bunch of canned, pre-election stuff. The sad thing is that for both the death of US civilans in the line of duty is an electoral gambit.
The "if we build it, they will come" economy is back - or is it failing? That's the circular question that the biggest jump in wholesale inventories in six months leaves many asking. The most telling answer that perhaps this Keynesian 'build-it' program is failing is the near three-year high in the Inventory/Sales ratio having risen three months in a row. This is the biggest three-month build in inventories relative to sales in three-and-a-half years. The Circle of life goes on; stack inventories; stuff channels; start free-credit.
Summary: Today, the German Constitutional Court ruled that the Eurozone’s permanent bailout fund, the ESM, and its ‘fiscal treaty’ on budget discipline do not violate the country’s ‘basic law’ and do not undermine Bundestag sovereignty over budget issues. However, the Court added a cap to the size of the ESM. It also reinforced the effective ‘veto’ of the German Bundestag over ESM activation, and therefore in effect also over a debtor country’s access to the ECB’s bond-buying programme (OMT), since the two are linked. However, the ruling was not unambiguous and in many ways an invitation to further court cases – over ECB bond-buying and others – and a lot more political wrangling.
MEP Nigel Farage provided a much-needed dose of reality to the peculiar pontifications of Barroso's state of the union speech last night. Concerned at the fanaticism of Europe's ever more concentrated power-base, summed up by his interpretation of Barroso's call for a federal union of states (cue Darth Vader music): "while the nation state should continue to exist, it mustn't have any democratic power," the Englishman goes on to deride Mario Draghi's unlimited money bazooka - though we suspect Farage's belief that "money doesn't grow on trees" will soon come into question day after day. Super Mario as much as implied that he "will fight to the last German taxpayer to keep the Mediterranean countries, that should never have been in the Euro, in there," but for a sense of just how ludicrous things are becoming in the EU, this clip is important as he reminds us of Monti's (monstrous Mario) recent statement that "nation-state democracy will bring down the European Union." Farage fears this rumbling facade over a crisis could go on for a decade, we can only hope not - one way or another.
The answer, of course, is yes: they are after all, economists (who somehow, with no real world experience, determine the daily fate of billions of productive and capital-allocation decisions every day). But it is one thing for everyone to discuss the obvious anecdotally by the water cooler. It is something else for this verbal heresy to be printed in a "serious" publication. Such as Reuters, which today asks if "the Federal Reserve has watched the U.S. recession and painfully slow recovery through rose-colored glasses?" And answers: "A look at the U.S. central bank's economic forecasts over the past five years suggest it has." It then explains: "Since October 2007, when the Fed's policy committee began giving quarterly predictions for GDP growth and the jobless rate, the central bank has downgraded its nearer-term forecasts almost two-and-a-half times as often as it upgraded them. The gap between Wall Street's expectations for 2012 growth and the Fed's own current view points to yet another downgrade on Thursday, when policymakers wrap up a two-day meeting that has world financial markets rapt." It concludes: "The trend of back-pedaling shows how poorly the central bank has fared at reading the economic tea leaves, with the Fed's optimism a likely factor in policy decisions through the Great Recession and its fallout, economists say." In summary: the world's most ebullient and permabullish forecasters, who incidentally happen to constantly be wrong in their desperate attempts to affect the only thing that matters: consumer and investor sentiment and confidence via the increasingly irrelevant myth that are asset prices, happen to run the monetary world and "determine" just what the future looks like. Needless to say, if the Fed's presidents were actually employed in the private sector, they would have been fired ages ago. Only in a fiat world do they not only keep their jobs, but keep on running the world.
A wonderful sheep-like 88% of all economists surveyed in a recent Bloomberg poll believe QE3 is inevitable - up from 76% at the end of July. 64% are convinced the LSAP will be announced tomorrow. Perhaps more interestingly, given the reality of flow over stock efficacy, 32 of the 73 expect an open-ended QE program - of around USD65bn TSYs or USD35bn MBS per month. In line with our own market-implied expectations, the median estimate for QE3's size is USD700bn (split between TSYs and MBS - which likely reflects the size constraints of the Fed's already huge dominance of the TSY market). Perhaps most surprising is that only 68% expect an extension of the rates guidance - and paradoxically, given all these expectations for moar money, is that 49% of those surveyed believe Fed policy is too easy. Perhaps this response best sums up the quandary that the Fed finds itself in, sadly, "Disappointing the markets doesn’t seem like a good strategy, but it’s not obvious how much more GDP to expect if they fulfill market expectations for more action."
Submitted by Tyler Durden on 09/12/2012 - 08:17 Corruption Reuters That didn't take long. BBC reports that "Military bases in South Africa have been placed on high alert for the first time since the advent of democracy in 1994, defence officials have confirmed. The move comes as firebrand politician Julius Malema prepares to address disgruntled soldiers near Johannesburg. The defence minister accused him of trying to "mobilise against the state"." In other words, striking miners are about to be considered enemies of the state, if they hinder record high profit margins at various international precious metal conglomerates. Hopefully South Africa does not test the theory that the worker exterminations (as a reminder tens of striking workers were previously killed by local police) will continue until worker morale improves, because i) it won't, and ii) it will lead to a complete shut down of commodity extraction in the country.
Ten days ago, when describing the latest casualty of the ongoing South African miner revolution, we said: "Expect more South African mines to shutter, as gold production in the world's third largest gold producer grinds to a halt, and the local workers grasp they had the leverage all along. Should the South African example spread to other countries, then expect the price of gold to soar regardless of how much printing the central planners engage in the coming weeks and month." Fast forward to today: "Labour unrest sweeping across South Africa's mining sector hit top world platinum producer Anglo American Platinum on Wednesday, with striking miners blockading roads leading to shafts belonging to the mining giant, police said. The platinum price jumped as much as 1.5 percent to $1,624.74 an ounce, its highest since mid-April amid fears of more disruption to supplies of the precious metal used in jewellery and vehicle catalytic converters." The good news: the complete mining shut down has not spread to other countries. Yet. The bad news: as expected, one after another South African mine is going offline. Why is this an issue? Because Chinese demands is soaring, even as the world is about to lose its third largest producer of gold. Not even the CME hiking gold margins to infinity will do much to prevent what will inevitably be a surge in precious metal prices. Factor in what is likely to be more easing by Bernanke tomorrow, and it may be time to eye the all time nominal high of just over $1,900 gold hit a year ago.
Cutting to the chase, the murder of a US ambassador is not casus belli. Perhaps because it is not quite certain just whom the US would retaliate against, if it indeed decided to do so...
While everyone, everywhere is earnestly scratching their heads if under the 'Fairness Doctrine' the murder of a US ambassador to a recently "liberated" Muslim country is considered casus belli, or merely the signal to turn the other cheek, and eagerly awaiting Hillary Clinton to advise on the issue, here is the just released statement by the president.
- Germany Can Ratify ESM Fund With Conditions, Court Rules (Bloomberg)
- Obama Discusses Iran Nuclear Threat With Netanyahu (Bloomberg)
- Stocks, Euro Gain as Court Allows ESM; Irish Bonds Climb (Bloomberg)
- U.S. cautions Japan, China over escalating islands row (Reuters)
- Draghi alone cannot save the euro (FT)
- 'New York Post' Runs Boldest Anti-Obama Ad Yet (Bloomberg)
- Another urban legend: Fish Oil Pills Don’t Fix Heart Ills in 24-Year Data Review (Bloomberg)
- Troika Says Portugal’s Program is ‘On Track’ (Bloomberg)
- Russia Wants to Steer Clear of 'Gas War' (WSJ)
- U.S. Said Set to Target First Non-Bank Firms for Scrutiny (Bloomberg)
- Wen Says China’s Policy Strength Will Secure Growth Targets (Bloomberg)
- UK faces clash with Brussels on City (FT)