What Could Possibly Go Wrong

Expansionist Madness in the House Regarding Israel

"I think every part of this is unconstitutional, stupid and crazy, but that's the nature of voting, politics and lobbying in this U.S. government. Everyone who voted 'Yes' on this should be voted out of office. The House of Representatives passed an amendment (315 to 108) to the National Defense Authorization Act that says 'It is the policy of the United States to take all necessary steps to ensure that Israel possesses and maintains an independent capability to remove existential threats to its security and defend its vital national interests.' This amendment provides Israel with important benefits that the 50 states get, but without paying any of the costs." Continue reading →

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QE Won’t End—It Will Increase

"Bernanke and the Fed are going to reconsider the end of QE, and then decide against it. And eventually, if yields continue to rise (that is, if bond prices continue to fall), Benny and the Fed will up the dosage on the QE. Whatever it takes to keep yields down and interest rates low. Remember, Bernanke and the Fed are convinced that higher interest rates will kill any sustained recovery. Nothing will shake them from that idée fixe. Therefore they will do anything to prevent high interest rates—including walking back this talk of ending QE, and upping the dosage as need be to achieve their goal of sustained, consistent zero-percent interest." Continue reading →

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A Social Phenomenon: Protests Erupt in Brazil

"A girl organized a protest, expecting a few hundred people to attend. Instead, there were tens of thousands, and then a million. It was like throwing a seed crystal into a super-saturated solution and causing crystallization throughout the whole body of liquid. It was like a wildfire spreading. This is what we so far have NOT seen occur in America. This is, however, what the authorities are preparing for. They know that the array of grievances of Americans is growing by the day, week, month and year. They know that they have not addressed these grievances, and they know that when the promises of government cannot be kept, these grievances are going to spill into the streets." Continue reading →

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Egypt’s army threatens to ‘intervene’ if unrest continues

"Egypt’s defence minister warned on Sunday that the army will intervene if violence breaks out in the country where opponents of President Mohamed Morsi are planning rallies against him this month. 'The armed forces have the obligation to intervene to stop Egypt from plunging into a dark tunnel of conflict and infighting,' Abdel Fattah al-Sisi warned on the eve of the first anniversary of Morsi’s election as opposition leaders clamoured for his resignation. Morsi’s opponents, who accuse him of hijacking the 2011 uprising that toppled Hosni Mubarak’s regime, plan a rally on June 30 to mark the day Morsi was sworn in as Egypt’s first civilian and Islamist president." Continue reading →

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US Marines Put On Alert To Move Into Egypt Amid Violent Protests

"Amid anti-government demonstrations planned for this weekend, roughly 200 combat-capable U.S. Marines in southern Europe have been put on an alert status should they need to protect the U.S. Embassy or American citizens in Egypt, CNN is reporting. The Marines were told to be ready to deploy within an hour, and would be flown in via MV-22 Osprey, the Marine Corps’ rapid deployment aircraft. A state department spokesman told CNN that the move is precautionary, and that the U.S. fully expects the Egyptian security forces to be able to protect the American diplomatic facilities." Continue reading →

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Italy could need EU rescue within six months, warns Mediobanca privately

"Mediobanca, Italy’s second biggest bank, said its 'index of solvency risk' for Italy was already flashing warning signs as the worldwide bond rout continued into a second week, pushing up borrowing costs. The report warned that Italy will 'inevitably end up in an EU bail-out request' over the next six months, unless it can count on low borrowing costs and a broader recovery. Emphasising the gravity of the situation, it compared the crisis with when the country was blown out of the Exchange Rate Mechanism in 1992 despite drastic austerity measures. Italy’s €2.1 trillion (£1.8 trillion) debt is the world’s third largest after the US and Japan." Continue reading →

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Central banks sell record sums of US debt

"Central banks sold a record amount of US Treasury debt last week while bond funds suffered the biggest-ever investor withdrawals as markets shuddered at the prospect of the US Federal Reserve ending its quantitative easing programme. Holdings of US Treasuries held at the Fed on behalf of official foreign institutions dropped a record $32.4 billion to $2.93 trillion, eclipsing the prior mark of $24 billion in August 2007. It was the third week of outflows in the past four. Private investors are also dumping fixed income. US funds were the worst hit, with withdrawals totalling $10.6 billion, but emerging market debt funds also saw record redemptions of $5.6 billion." Continue reading →

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Why the Status Quo Is Doomed

"Every one of these implicit assumptions has been turned on its head: growth is barely above the rate of inflation; by some measures, it has already fallen below the real rate of inflation. Debt is increasing much faster than income or wealth. Virtually all of the recent expansion of wealth/income is flowing to the top 10%. This is why the status quo is doomed: there is no Plan B or even conceptual alternative to the 'more growth forever' agenda. The oft-touted fantasy is that 'we're going to grow our way out of this,' but it is abundantly clear that debt is rising far faster than growth or incomes." Continue reading →

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British central bank softens rules for banks to give economy £70bn boost

"The UK’s big four lenders will be able to reduce their cash and cash-like assets by 20pc under the recommendation, made by the Bank’s Financial Policy Committee (FPC). The excess 'liquidity' could then be used 'to support lending to the real economy', it said. The FPC estimated the impact of the rule change on the big four to be 'around £70bn'. Interest rates have been at a record low of 0.5pc for more than four years and households have become increasingly reliant on such cheap credit. The proportion of borrowers on variable rate mortgages linked to the 0.5pc rate is close to a historical high, the Bank said." Continue reading →

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The Last Mystery of the Financial Crisis

"Thanks to a mountain of evidence gathered for a pair of major lawsuits, documents that for the most part have never been seen by the general public, we now know that the nation's two top ratings companies, Moody's and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash. In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked. 'Lord help our fucking scam . . . this has to be the stupidest place I have worked at,' writes one Standard & Poor's executive." Continue reading →

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