Wednesday, September 19, 2012

French Magazine Portrays Prophet Mohammad Naked In Cartoons, Set To Further Infuriate Muslim World

It's almost as if someone is actively trying to force the Muslim world to launch an all out war against the "developed" west. A week ago, it was a film mocking Mohammad which led to the death of the US ambassador in Libya. Today, it is a French magazine which has ridiculed the Prophet Mohammad by portraying him naked in cartoons, which, as Reuters logically adds, "threatens to fuel the anger of Muslims around the world who are already incensed by a film depiction of him as a womanizing buffoon." It is as if the anti-Iran strategy of antagonizing the country to its breaking point, merely so the first attack comes from them in response to endless provocations, and a defensive retaliation can be spun to the "free world", has now been adopted against the entire Muslim world now, and all the insolvent Western countries are praying they get attacked just so the media spin will coalesce the sheep around the "developed" democracies in an all out "retaliatory" assault, which among other things, liberates tens of millions of barrel of oil equivalents, even as it spreads democracy and unlimited credit cards.

The Trouble With Printing Money

Since the very beginning of my public writings, I have leaned heavily towards the path of inflation, by which I mean money printing or its electronic equivalent, because even a cursory review of history will show that leaders have always chosen a little money printing today and the possibility of inflation tomorrow over the immediate pain of having to live within their means or with the consequences of their poor decisions. That was just a fancy way of saying 'humans will be humans,' and while our technology has advanced tremendously over the past few decades, our DNA blueprints are virtually identical to those found in people living 50,000 years ago.  History can tell us much. Our current predicament has its roots way back in the early 1980s, when something changed in our collective psyches that allowed us to abandon thrift and savings in favor of spending and borrowing.

2 U.S. Supreme Court Justices – And Numerous Other Top Government Officials – Warn of Dictatorship

George Washington
09/19/2012 - 01:21
Justices Souter and O’Connor, Intelligence Agency Heads and Congressmen All Warn of Tyranny in America

Gundlach Is Not A Fan Of Socialism, Thinks Apple Is "Over-Bought"

After last week's presentation, DoubleLine's Jeff Gundlach (having rotated his spec play from Long Nattie, Short AAPL - which was a winner - to Long SHCOMP, Short SPX) committed the cardinal sin in a great interview this morning with CNBC's Gary Kaminsky. The apocryphal 'new' bond guru noted that he is against big government, doesn't like risk assets at these levels, believes QE will end in higher rates (adding that he would not be surprised to see 10Y yields 100bps higher by the end of the year), but most abhorrently: "the obsession with Apple is a truly remarkable social phenomenon - the stock is over-believed and over-bought. There is NO exit for the Fed, QE3 will be ineffective, and it is more likely that the Fed buys all the Treasury bonds that exist." Two must-see clips covering why buy-and-hold is completely dead thanks to government intervention to his preference for secured credit funds (where have we heard that before?) to the huge risks in buying financial stocks and the vulnerability of risk-assets - as the world realizes the circular financing reality of Europe. 

Prepare For A 15% Food Price Surge, Rabobank Warns

The record US, and global, drought has come and gone but its aftereffects are only now going to be felt, at least according to a new Rabobank report, which asserts that food prices are about to soar by 15% or more following mass slaughter of farm animals which will cripple supply once the current inventory of meat is exhausted. From Sky News: "The worst drought in the US for almost a century, combined with droughts in South America and Russia, have hit the production of crops used in animal feed - such as corn and soybeans - especially hard, the report said. As a result farmers have begun slaughtering more pigs and cattle, temporarily increasing the meat supply - but causing a steep rise in the price of meat in the long-term as production slows. "Farmers producing meat are simply not making enough money at the moment because of the high cost of feed," Nick Higgins, commodity analyst at Rabobank, told Sky News. "As a result they will reduce their stock - both by slaughtering more animals and by not replacing them." Somewhat ironically. food prices are now being kept at depressed prices as the "slaughtered" stock clears the market. However once that is gone look for various food-related prices to soar: a process which will likely take place in early 2013, just in time to add to the shock from the Fiscal Cliff, which even assuming a compromise, will detract from the spending capacity of US (and by implication global) consumers.

Cashin On Gann Folklore And Friday's Fireworks

With tomorrow's CDS roll (when indices change composition and on-the-run maturities are extended) and Friday's major equity option expiration and S&P index reweightings, it would appear, as UBS' Art Cashin notes, that the action of the last few days (and even last week) will be largely driven by the creation of complex strategies to "milk out every ounce of profit that might be available in such huge [technical] shifts." Combine this technical factor with the Autumnal Equinox, of W.D.Gann infamy, and the stage is set for fireworks as we approach Friday.

China Launches Cyberwar Against Japan As Hackers Take Down 19 Japanese Websites

Fishing boat armada? Check; Threat to dump JGBs? Check; One thing was missing, and that was cyberwarfare, aka #OccupyJapaneseServers. That too has now been checked. Globe and Mail reports that at least 19 Japanese websites, including those of a government ministry, courts and a hospital, have come under cyber attack, apparently from China, police said Wednesday. Many of the websites were altered to show messages proclaiming Chinese sovereignty over the Diaoyu islands, a Japanese-administered chain Tokyo calls Senkaku, the National Police Agency (NPA) said in a statement. The NPA has confirmed that about 300 Japanese organisations were listed as potential targets for cyber attack on the message board of Honker Union, a Chinese “hacktivism” group, it said.

Chinese Protesters Chant "Down With US Imperialists", Attack Car Of US Ambassador In Beijing

Anti-Japan protests may have quieted down on the day after the anniversary of Japan's invasion of China (which is not saying much: after disappearing for two weeks, perhaps in some Las Vegas strip club, the Chinese leader-in-waiting Xi Jinping denounced Japan's decision to buy disputed islands "as a farce" on Wednesday and said Tokyo should "rein in its behavior"), but that does not mean anything has been resolved, and the Chinese 1000 boat armada is still supposedly on its way to the Senkakus. Elsewhere, the US foreign department may have to promptly find an anti-Buddhist hate tape made in the US, because otherwise the attack of the US ambassador Gary Locke's car in Beijing may have to be explained using good old fashioned simmering hatred and anti-American sentiment without an actual inflamatory event. LA Times reports: "The car of the U.S. ambassador to China was surrounded by a small group of demonstrators on Tuesday, who damaged the vehicle and briefly prevented it from entering the U.S. Embassy compound in Beijing. A YouTube video of the incident showed the protesters chanting slogans such as “down with the U.S. imperialists” and, in an apparent reference to the Chinese government’s purchase of U.S. government debt, “return the money!

Gold running into Resistance at $1780; Silver at $35

Trader Dan at Trader Dan's Market Views - 1 hour ago
Same comments this AM as last evening. Both metals are being capped by those respective resistance levels. 

Trading Around Core Gold Position

Eric De Groot at Eric De Groot - 2 hours ago
Investors unable to deny the urge to trade gold should do so only on the periphery of their portfolio. Core holdings purchased with proceeds of periphery trading and designed for long-term profits should not be touched until the secular bull market reaches the mania phase. My ability to trade around the core is supported by 15+ years of intensive computer study of price, time, and money flows.... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Mortgage Lending Slid to 16-Year Low in 2011

Eric De Groot at Eric De Groot - 4 hours ago
Watch out below! Buying toxic mortgages from banks won't stimulate private sector credit creation. Chart: Real Estate Loans 12-Month Change (RE12LN) And Percentage of Total Bank Credit (%TBC) Headline: Mortgage Lending Slid to 16-Year Low in 2011 WASHINGTON—Mortgage lending continued to drop off last year in the U.S., falling to a 16-year low as the housing market... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

JPY10 Trillion Intervention Half-Life: 5 Hours; Full Fade: 9 Hours

It appears that the Central Banks have finally reached Peak Efficacy, after shooting themselves in the head with Bernanke's asinine QEternity which leaves nothing else to be priced in. Last night's JPY10 trillion fact (no longer rumor, whisper, or promise) of more LSAP from the BoJ had its typical knee-jerk reaction but within 5 hours it was 50% retraced and now at 9 hours the entire move (and its accompanying S&P 500 future's correlated risk-on surge) have been fully retraced. In other news, there is a rumor that the Bank of Zambia is contemplated proceeding with open-ended easing to infinity and beyond. Sadly, none of this matters at all any more as monetary policy is no longer a factor in a world in which all the future CTRL-Ping is already accounted for.
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Japan Joins The Can Kicking Party

Eric De Groot at Eric De Groot - 4 hours ago
The list of countries devaluing their currencies to strike a blow at the global economic slowdown continues to grow: Europe China United States Now Japan (tipped by the message of the market last week) In the 1930's today's kicking the can down the road policies were called beggar thy neighbor. History tells us that they will fail miserably today as they did during the Great... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Politicians Around The World Are Printing A Lot Of Money

Admin at Jim Rogers Blog - 5 hours ago
I own precious metals because I expect more money printing. I own gold, I am not selling gold, whenever gold goes down I buy more. If it goes down a lot I hope i’m smart enough to buy a lot more because the price is going to go much higher over the next decade. Politicians around the world are printing a lot of money that’s the wrong thing to do, but that’s what they’re doing and whenever they print money the way to protect yourself is own gold, silver, platinum, palladium, any precious item will protect you in time like that. - *in Gold Made Simple* Related: iShares Silver Trust E... more » 

You Ought To Own Some Gold But Don’t Store It In The U.S.

Admin at Marc Faber Blog - 5 hours ago
The trend for gold prices will be steady but the trend for the dollar and other currencies will be down. So in other words gold in dollar terms will trend higher. How high it will go, you will have to call Mr Bernanke and at the Fed there are other people who actually make Mr Bernanke look like a hawk and so they are going to print money. You ought to own some gold but don’t store it in the U.S., the Fed will take it away from you one day. - *in Business Insider * * *Related: SPDR Gold Trust ETF (GLD), Newmont Mining (NEM), Goldcorp (GG), Barrick Gold (ABX) *Marc Faber is an intern... more » 

The New Style of Warfare - Bloodless but Extremely Devastating

Trader Dan at Trader Dan's Market Views - 12 hours ago
Take a look at the following article and you will see that the Biblical concept of "the borrower becomes the lender's slave" is once again proving itself to be true in any age at any time. Beijing hints at bond attack on JapanA senior advisor to the Chinese government has called for an attack on the Japanese bond market to precipitate a funding crisis and bring the country to its knees, unless Tokyo reverses its decision to nationalise the disputed Senkaku/Diaoyu islands in the East China Sea. more » 

Conflict between Japan and China Intensifies/Rajoy still refuses to ask for aid/Europe stock exchanges fall in price/

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 18 hours ago
Gold closed up by 50 cents to $1768.40 retracing all the dollars it lost yesterday in the access market. Silver also rose by 38 cents to $34.64 as investors believe that they have the bankers on the ropes. I saw that the gold equity shares started to rally at the close of trading yesterday despite the huge raid in the access market.  It seems that massive paper demand overwhelmed the massive

The Inevitable Decline Of Retail

Retail has long been a source of both low-skill entry-level jobs and well-paid careers. Yes, people love to browse and stroll down the mall or shopping district, and this social/novelty function will continue. But can retailers make money off of people browsing? If retail contracts, what does this do to skyhigh commercial property valuations? The same can be asked of cubicle-farm office parks. As telecommuting and contract labor expand, the need for energy-wasting office parks and long commutes will also decline. Technology cannot be stopped, and neither can the drive to cut costs by cutting what can be cut, labor. We can legislate certain aspects of how technology is used, and fiddle with tax incentives and trade restrictions, but we cannot make people drive somewhere to go shopping or stop the 3-D printing/fabrication revolution. What all this calls into question is the entire financialization (debt-based)-consumerist model of "growth" and employment. Decades ago, young men were employed to pump gasoline at gas stations; these jobs all went away as self-service fueling became the norm. At least one state (Oregon, I believe) mandates that all gasoline is pumped by an employee of the station. This rule has created hundreds of jobs that are not necessary in terms of market-demand but that are certainly welcome.

Spot The Odd Commodity Out

Oil is dropping rapidly once again - while the rest of its commodity peers remain tied to the USD movements this week. The reason? More market speculation that the House of Saud is doing everything in its power to send crude to lows just ahead of the presidential election, even as Infinite QE takes the Dow to 36,000. Just as we wrote yesterday.

Spanish Bad Loans Soar By Most Ever In Past Quarter To All-Time Highs

A month ago we warned that loan delinquencies in Spain were bad and getting worse at a concerning rate. The most recent data update, which revised that 'bad' print to absolutely dismal, has broken records for just how ugly things are for Rajoy and his fellow countrymen. Spanish bank loan delinquencies rose to an all-time (50-year) record 9.86% with the last four months seeing simply unprecedented acceleration in the rate of bad loans. Numerically, this means that an absolutely whopping €172 billion of the €1.7 trillion in Spanish financial assets is now money bad, and will no longer  generate cash flows. This amounts to about 17% of total Spanish GDP. In GDP-equivalent terms, this would be equivalent to $2.5 trillion in US bank loans being "bad." Which, when one cuts all the prevarication and lies, is probably what the true status of the US financial system is. Add to this the now relentless deposit flight which is depleting Spanish bank coffers and one can see why the European credit death spiral is very aptly named.

ECB Debasement Is Akin To Work Of Devil – Risk Of “Rapid Currency Depreciation”

As the FT reports today “In early scenes from Goethe’s tragedy, Mephistopheles persuades the heavily indebted Holy Roman Emperor to print paper money – notionally backed by gold that had not yet been mined – to solve an economic crisis, with initially happy results until more and more money is printed and rampant inflation ensues.”  The classic play highlighted, Weidmann argued, “the core problem of today’s paper money-based monetary policy” and the “potentially dangerous correlation of paper money creation, state financing and inflation”. In yesterday’s speech in Frankfurt, Goethe’s birthplace, he said: “The state in Faust Part Two is able at first to rid itself of its debts while consumer demand grows strongly and fuels a strong recovery. But this later develops into inflation and the monetary system is destroyed by rapid currency depreciation.” The name Mephistopheles as used by Goethe comes from the Hebrew word for destroyer or liar.   Mephistopheles is a fallen archangel, one of the 7 great princes of Hell and in Goethe’s ‘Faust.’ Mephistopheles is acting for his overlord Satan and seals the pact with Faust. Weidmann is suggesting that the ECB’s current monetary policies are a Faustian pact or a pact with the Devil and that they secure short term gain but will end in the disaster of rampant inflation.

Why The 'Clinton' Recovery Is Unrepeatable

Amidst the debates on what the US should do to re-establish an era of prosperity, there are a lot of references in the media and at political conventions to the "Clinton Recovery". This refers to the period from 1992 to 2000, the best in post-war history: 19% equity returns, 3.8% annualized real GDP growth, monthly payroll gains of 265,000 (adjusted for today’s population) and an average budget deficit of less than 2% of GDP. As Michael Cembalest of JPMorgan notes, applying a President’s name to a recovery or recession always seems to be a case of artistic license; you might as well call it "The Kardashian Recovery" in some cases, given how little Presidential policies had to do with it. Most of the time, domestic and global business cycles, monetary policy and other factors were the primary drivers. However, to recreate the policy conditions which prevailed would require a centrist - who most likely would have been excommunicated by his party for heresy as the political middle ground occupied by the party non-conformists is gone.

August Housing Starts Less Than Expected, Rise From Downward Revised Print

The August housing starts number was a disappointment, printing at 750K on expectations of a rise to 767K from last month's 746K, now revised lower to 733K. This would have been a boost to a market trained to expect more QE on any economic weakness, if only all QE in perpetuity, and certainly at leat $85 billion in monthly flow, was not already priced in. As a result, we are slowly getting to the dreaded point where bad news is once again bad news, at which all faith in the Fed as a monetary policy vehicle is lost (since Fiscal policy is now perpetually deadlocked). If there was any good news, it was in the single family starts which printed at 535K in August, a rise of 28K from July, and the highest since April 2010 (when housing had again "bottomed") driven by a surge in new building in the Midwest to 134K, from 111K. Finally housing permits which are nothing but noise, declined but beat expectations modestly. Since permits are a completely meaningless category and are purely used by hedge funds to game the market (they cost a token amount of money to procure, involve no actual work, and are there merely to frame the "housing has bottomed" trope time after time, until disproven), just like Libor, there is no point to observe them.

Daily US Opening News And Market Re-Cap: September 19

The BoJ obediently submitted to pressure from stimulus addicted markets and announced yet another expansion to its JGB buying program. The program now stands at JPY 80trl, the expansion impacts only JGBs and T-Bills, both of which will be monetized by a further JPY 5trl. As a result, risk assets rallied overnight in Asia and in turn supported European equity markets in early trade. However, the half life of the latest policy easing action from the BoJ proved to be very short-lived and as the session progressed, the risk on sentiment quickly subsided. As such, as we enter the North American cross over, equity markets in Europe are seen lower, led by tech and financial stocks.  Elsewhere, Bunds topped yesterday’s high and look set to make a test on the 140.00 level should the sentiment deteriorate further. Nevertheless, peripheral bond yield spreads are actually tighter today, with the Spanish 10y bond yield spread tighter by 9bps and the shorter dated 2y bond tighter by 24bps vs. German equivalent. EUR/USD and GBP/USD edged lower throughout the session, currently trading in close proximity to intraday option expiry levels at 1.3000 and 1.6200 respectively. Going forward, the second half of the session will see the release of the latest housing data, as well as the weekly DOE report.

Frontrunning: September 19

  • Deposit Flight From Europe Banks Eroding Common Currency (Bloomberg)
  • BOJ eases monetary policy as global slowdown bites (Reuters)
  • Stalled Rally Puts Pressure on Spain (WSJ)
  • Missed Chances Stoke Skepticism Over EU’s Crisis Fight (Bloomberg)
  • Germany's big worry: China, not Greece (Reuters)
  • Goldman names new CFO, heralding end of an era (Reuters)
  • Russia Demands U.S. Agency Halt Work (WSJ)
  • Fed’s Dudley Says Easing Vital to Spur Too-Slow Growth (Bloomberg)
  • Romney under fire from all sides (FT)
  • Poland cuts red tape to spur growth (FT)
  • IMF to Put Argentina on Path to Censure Over Inflation Data (Bloomberg)

Overnight Sentiment: More Printing; More European Catch 22s

Those who expected a major response following the surprising, and "preemptive" easing by the Bank of Japan which has now joined the freely CTRL-Ping club of central banks, and went to bed looking for a major pop in risk this morning will be disappointed. The reason is that with every passing day that Spain does not request a bailout, all those who bought Spanish bonds on the assumption that Spain will request a bailout look dumber and dumber (a dynamic we explained nearly two months ago). As a result, the EURUSD has been dragging ever lower, and is now playing with 1.30 support. Providing no additional clarity was Spanish deputy PM Soraya Saenz de Santamaria who said Spain will decide if and when to trigger an ECB bailout once all details have been analyzed. Well the details have been more than analyzed, and Spain has been more than happy to receive the benefits of its bailout, it has yet to trigger the cause. Ironically in a Barclays study,over 78% of investors see Spain requesting a bailout by year end (even though as we explained over the weekend Spain really has to do this ahead of its major cash drawing bond redemption schedule in October when it may well run out of cash). And so, just like the US Fiscal Ceiling, the global markets are expecting some Catchy 22 deus ex machina, where traders can get their cake and politicians can eat it too. Alas, there never is such a thing as a free lunch. And what is making the much needed outcome even less probable is that Spanish bonds this morning are actually trading tighter once again making a bailout less than likely. The Spanish zombie has left its grave and is now romping through the neighborhood unsupervised.

Today’s Items:

China Vs. US
Lets see…    First we have a Chinese general telling his troops to be ready for combat against U.S. backed Japan over island claims.   Then we have Obama suing China at the World Trade Organization over subsidies for exports of cars and car parts.   In response, China is suing the US at the World Trade Organization for anti-dumping measures on billions of dollars in goods. In addition, things are getting so bat-crap crazy with the Chinese and U.S. Navy are conducting anti-UFO exercises off of San Francisco!

Cheap Diamonds in the Future
Russia has announced that they have, in eastern Siberia trillions and trillions of carats in diamonds.   There is enough diamonds present, in a 62 mile diameter asteroid crater, to supply the global market for  3,000 years.    Although they have known about this since the 70′s, they have kept it a secret.   Needless to say, anyone believing in storing wealth in diamond’s, may have seen their wealth flushed down the toilet.

Five Deadly Effects of QE3
1. QE3 kills savings for a generation.
2. QE3 is great for insiders, but bad for the public.
3. QE3 will artificially keep borrowing costs of the government low…   For now.
4. QE3 will not reduce unemployment
5. QE3 will increase inflation

Canada Ranked in Top 5 for Economic Freedom
According to a new Fraser Institute report, as a result of shrinking government since the mid-1990′s, Canada is now among the top five countries with the most economic freedom.   The U.S. has dropped to to the dismal 18th place – its lowest level ever; however, with expanding government, we can expect to see it go even lower.    On the other hand, if the American people got rid of all politicians, bankers and nutty regulations, that would change quickly.

U.S. Caught Creating Three New Computer Viruses
The U.S. government has again been caught creating computer viruses to wage cyber warfare in the Middle East.    Like the Flame virus, researchers discovered that the US is likely responsible for three new viruses that are being used in Lebanon and Iran to conduct espionage.    And we are supposed to trust these bastards to protect this country from cyber threats when they are creating viruses?

Justice Department and Media Matters Joined
Dozens of pages of emails from the Department of Injustice shows how Eric Holder’s office has collaborated with Media Matters.    The objective, of course, is to spin and quell news stories about the continuing scandals plaguing Holder.    Of course, no amount of spin can hid the fact that the Department of Injustice, under Holder’s direct supervision, was responsible for hundreds of innocent deaths in Mexico and the death of Border Patrol Agent Brian Terry.

Drug Prescriptions Written
In 2011, doctors wrote 4.02 billion prescriptions for drugs in America.    In the UK, the average number of pills a person take in their lifetime is 14,000.    All these pills and drugs cannot be good for people.    Especially since medical drug adverse reactions may be killing over 100,000 people a year.

Finally, please prepare now for the escalating economic and social unrest. Good Day!

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