Contributed by Jen Alic of Oilprice.com: The situation in Egypt has not been tenable since the Muslim Brotherhood and President Morsi took over, post-revolution, but now that the military has stepped in, ousted Morsi, and placed him in detention, foreign investors are celebrating – on the logic that things couldn’t get any worse, only better.
Contributed by John Mauldin, of Mauldin Economics: The Narrative of Gold is still significant, but mostly in contrast to the narrative that has assumed primacy today: the Narrative of Central Banker Omnipotence. Like all effective narratives, this one is simple: central bank policy will determine market outcomes.
By Farah Halime, Cairo: “Let us savour the moment now and worry about the future later,” some Egyptians said after the military had ousted President Morsi. But as the jubilant atmosphere of Tahrir Square fades, there is one certainty: Egypt’s economy must be made an absolute priority, or risk repeating this scenario in another 12 months.
“The Wall Street coddling monetary régime” that Greenspan institutionalized “deeply transformed M&A,” writes David Stockman. It turned a corporate business strategy into "an all-encompassing mechanism for speculative finance” that executives used to build "empires with apparent, if unsustainable, earnings growth" that ended in "spectacular crash landings."
Contributed by Don Quijones: The first four items the G-8 dealt with was the need for governments to share information to “fight the scourge of tax evasion.” If only their primary targets were multinationals, banks, and hedge funds that pay a pitiful fraction of the taxes they owe in the countries they operate. But they’re going after the little guy.
Tapering bond purchases gets real. New York Fed President William Dudley has spoken. He represents Goldman, where he was a managing director. Goldman owns part of the NY Fed and is one of its 21 “primary dealers.” But it doesn’t want the financial system to blow up. On the theory that you can milk a cow many times, but you can bleed it only once.
Chancellor Merkel’s coalition is likely to emerge victoriously from the elections in September, unless a major debacle blows up. So no debacle is allowed to occur until after the election. But just then, new revelations about NSA spying blew up: turns out, all citizens anywhere can be under surveillance by any government, including their own, beyond control and oversight.
"One of the great ironies of the Greenspan bubbles" was that his free market convictions enabled the Fed to drift "irreversibly into its eventual submission to the Cramerite intimidation," wrote David Stockman. It turned "a blind eye to lunatic speculations in the stock market, dismissing them as the exuberances of capitalist boys and girls playing too hard.
A technology that surreptitiously captures data of people out on the street, combines it with other data, and mines it ad infinitum? Local and federal government agencies love it. It’s increasingly sophisticated and cheap. It’s spreading. And it led a professor at West Point to warn: “We don’t have a police state in this country, but we have the technology.”
Ghost island: Hashima, a speck of land, used to be a coal mine where 5,000 people lived and toiled. But in the 1970s, it was abandoned and the concrete structures left to decay, only to resurface in the last James Bond movie. Now Google captured it for Street View – and made an awesome brief video of this eerie industrial wasteland.
Contributed by Chriss Street: The IRS scandal heated up when Greg Roseman, a Contracting Officer and Deputy Director of the IRS, took the Fifth to dodge questions by the House Committee on Oversight and Government Reform that wanted to determine if he fraudulently steered $500 million in IRS computer contracts to a tiny outfit fronting for IBM.
Contributed by Michael Lombardi, Profit Confidential: After the initial GDP estimates for the first quarter, optimism struck and markets rallied. Everything was headed in the right direction! But the final revision showed that the economy grew at just 1.8% – that's 25% lower than the previous estimate. Due to consumer spending and exports. And now, interest rates are rising!
Things move quickly at the G-20 when markets go south. The turmoil following Chairman Bernanke’s mere suggestion of a vague and slow taper of the Fed’s multi-year money-printing and bond-buying binge has already incited our illustrious finance gurus and central bankers at the G-20 to buckle – under the weight of the financial lobby.
“All of the checks and balances which ordinarily discipline the free market in money instruments and capital securities were being eviscerated by the Fed’s actions,” wrote David Stockman. “This kind of central bank action has pernicious consequences, however.”
The bond selloff didn’t surprise anyone. Gurus of all stripes had predicted for years that it would happen, that the ridiculously low yields the Fed was imposing weren’t sustainable – only to watch as the Fed opened the spigot even wider. Then the smart money offered a tidbit of immortal wisdom to the euphoric bondholders: “run – do not walk!” And they did.
It was the day when Private Equity firms – the smart money, the great beneficiaries of the Fed’s bond-buying binge – announced their intentions to the rest of the world. The heavy hitters were there, and they let fly some pungent words. In short, they were “selling everything that’s not nailed down.” Turns out, they weren’t kidding.
Governments, corporations, even that genius app developer in Russia have one thing in common: they want to know everything. Data is power. And money. As the Snowden debacle has shown, they’re getting there. Technologies for gathering information, then hoarding it, mining it, and using it are becoming phenomenally effective and cheap. But it’s not perfect.
Contributed by Lee Adler, of The Wall Street Examiner. The Fed, ECB, BoJ, and BoE all deal with the same banks. Of the Fed’s 21 Primary Dealers, its sole counterparties, only seven are US domiciled. Three are Canadian, eight are European, including three British banks, and three are Japanese. All of them are major players in Europe and Japan.
“The market had been taken over by white-collar financial hoodlums who needed a trading fix every day," writes David Stockman, Director of the OMB under President Reagan. "These punters and speculators were asserting an entitlement to any and all government policy actions which might be needed to keep the casino running at full tilt.”
Contributed by Don Quijones:Two weeks ago, Miguel Blesa, former president of Spanish savings bank Caja Madrid, went to jail for his role in the bank’s demise. Finally, a TBTF bank chief got nailed for his role in the financial crisis. But it was too good to be true! Now a witch hunt against the judge has begun.