A French appeals court threw the book at Jérôme Kerviel who, in 2008, had been hung out to dry by his employer, French mega-bank Société Générale, for having—so alleged the bank—blown €4.9 billion in no time without its knowledge, using trick and device to conceal his gigantic trades for years. But now, Kerviel and his lawyer lambasted the proceedings as having been rigged from the outset.
Contributed by Dan Steinhart, Casey Research. The US has too much debt. This is no longer a controversial statement. Some may believe other problems are more urgent, or that we need to grow our way out rather than slash spending. But even the most spendthrift pundits acknowledge that the debt-to-GDP ratio of the US must decrease if we are to have a stable, prosperous economy.
Contributed by Chriss Street. President Barack Obama has not had to campaign in California; he is leading by 15 points. But what if all 55 of California’s Electoral College votes were awarded to whoever wins the national popular vote? That almost happened as Governor Jerry Brown signed the National Popular Vote bill. Can you imagine the shock if the “Left Coast” were responsible for electing Mitt Romney President?
Contributed by Marin Katusa, Casey Research. Exxon Mobil is no longer the world's number-one oil producer. As of yesterday, that title belongs to Putin Oil Corp, oops, I mean, Rosneft, Russia's state-controlled oil company. It is buying TNK-BP, one of the top-ten privately owned oil producers co-owned by BP and some Russian billionaires. And who is in charge of Rosneft? Vladimir Putin, Russia's resource-full president.
The French government has been flailing about to counter economic trends that started while Nicolas Sarkozy was still president. And one of the most bandied-about catchwords these days is “competitiveness”—entailing the cherished and untouchable 35-hour workweek, equally untouchable wages, and sky-high employer-paid payroll taxes and social security charges. An explosive mix.
That France’s economy is hurting is an understatement. Manufacturing and service indices tested depths not seen since 2009 during the trough of the financial crisis. Cited reasons: “unfavorable business climate and lack of visibility.” In its desperation, the government deployed its big gun, a man with a vision: Industry Minister Arnaud Montebourg. Him, with his big foot in his mouth.
Contributed by Blankfiend, of Fibs and Waves. In the eye, loss of sensation can cause ulcers of the cornea that can lead to the loss of the eye. In diabetics, loss of sensation in the feet can lead to decubitus ulcers. Healthy individuals could actually do this to themselves through the continuous use of topical or local anesthetics. Turns out, pain mediates the release of a substance that promotes healing. Without it, the healing does not take place. The economy is no exception.
Contributed by Chriss Street. 80 million “baby-boomers,” born between 1946 and 1964, moved out of their peak spending years. The U.S. government over the last five years squandered $7.6 trillion on Keynesian demand-side stimulus to resuscitate this demographically shrinking demand. But with only 23 million born between 1995 and 2012, “Generation Z” is too small for demand-side stimulus to revive the economy.
The “shale gas revolution” opened up huge resources in the US, and natural gas production jumped as a consequence, but it pushed prices far below the cost of production, for far too long. A disaster for an entire industry. An amazing opportunity for its customers. Since April, the price has jumped 80%, and it’s still far below the cost of production.
Contributed by Doug Hornig, Casey Research. In times past, if you couldn't do anything else, you could probably listen to phone complaints all day. And somebody had to do it. Today, there's a new shine on customer relations departments, with a glossy title and a widely recognized abbreviation: customer relations management, or CRM. And there is a lot at stake for investors.
A blatant act of fear mongering: if Greece were allowed to exit the Eurozone, it could end up costing the world €17.2 trillion, the study said; it would be “incumbent upon the community of nations to prevent” that. The study was commissioned by the powerful Bertlesmann Foundation, propagating the doctrine that certain bondholders must always be bailed out to prop up confidence in the financial markets. “Insolvency procrastination” is how a quintessential German industrialist responded.
Militants attack oil infrastructure and staff. Oil theft leads to severe pipeline damage, causing loss of production and pollution. There is piracy, sabotage, violence, and decrepit infrastructure. Nigeria is the largest oil producer in Africa and has the ninth largest natural gas reserves in the world. Yet only 50% of the people have access to electricity.
Contributed by Marin Katusa, Casey Research. In the third century, greed got the best of Rome's emperors. One emperor after another reduced the amount of precious metal in each denarius until the coins contained almost no silver whatsoever. The world's first experience with currency debasement and hyperinflation. It led to social upheaval and violence. To be repeated many times over. And then there's Iran.
Two thermometers into the brains of corporate America plunged to depth not seen since the trough of the Great Recession when the US was losing hundreds of thousands of jobs a month. One was based on responses from CEOs of America’s largest corporations; the other was based on responses from analysts who’d listened to their industry contacts. Just before Lehman, these people had exactly zero predictive capabilities. So, could they now have ulterior motives?
Political Violence Scares Japanese Investors, Acrimony Flows Instead Of Money, But It Doesn't Stop Japan Inc.
Softbank’s announcement to buy 70% of Sprint for $20.1 billion caused its stock to plunge 17% in Japan that day. Investors had been through it before: a company paying way too much to accomplish a CEO’s megalomaniac goals, only to get mired in a corporate culture clash and other nightmares overseas. Japanese acquirers have a “terrible” track record.
Here I am on Max Keiser’s show, “On the Edge,” for a 23-minute hard-edged, tongue-in-cheek discussion about the “pauperization” of America and Europe, and other issues of our surreal times. Note how he corrects me when I call the political system in Greece a “democracy.” No way. Not on his show! It's a "kleptocracy," he said, and calling it a democracy is just.... Priceless!
Spain Is Losing Its People, Catalonia Fights For Independence, And The EU Gets Pushed Into The Conflict
“Do you want Catalonia to become a new state within the European Union?” That may be the question on the referendum that is causing a constitutional crisis in Spain even before the final wording has been decided. Efforts by Artur Mas, President of Catalonia, to pry his region loose from Spain are not only shaking up Spain but are pushing the European Union deeper into the conflict—just as Spain is plunging into a demographic nightmare.
Contributed by Lee Adler, The Wall Street Examiner. Retail Sales rose by 1.1% in September (month to month) and 5.4% annually. Those are seasonally adjusted idealized estimates. Neither figure is adjusted for inflation. The median forecast of economists was for a gain of 0.7%. As usual, they had mostly extrapolated the prior month’s gain. And as usual, their forecast was wrong by a wide margin.
Contributed by Dan Steinhart, Casey Research. US corporations are sitting on more cash than at any point since World War 2. That's without including banks. I'm only talking about nonfinancial corporations – the ones that sell goods and services and make the economy go.
Contributed by Terry Coxon, Casey Research. Year by year, government has become more present where economic decisions are being made. Through subsidies, tax breaks, regulation, and spending, government has claimed a virtual seat in the boardroom of most companies. In some cases, it holds a majority of the votes. And its involvement profoundly alters decision-making for investors.