The Interest Rate Swap, LIBOR rigging scandal - Ellen Brown. Great Article

Forex Trading Magazine | Learning Forex Trading | Forex Currency Market | Online Currency Trading: "LIBOR is set in London; but as Simon Johnson observed in a New York Times article titled The Federal Reserve and the LIBOR Scandal, the Fed has jurisdiction whenever the “safety and soundness” of the US financial system is at stake. The scandal, he writes, “involves egregious, flagrant criminal conduct, with traders caught red-handed in e-mails and on tape.” He concludes: 
“Bill Black concurs, stating, “Our system is completely rotten. All of the largest banks are involved—eagerly engaged in this fraud for years, covering it up.” The system needs a complete overhaul.
In the meantime, if the FDIC can bring a civil action for breach of contract and fraud, so can state and local governments, universities, and pension funds. The possibilities this opens up for California (where I’m currently running for State Treasurer) are huge. Fraud is grounds for rescission (terminating the contract) without paying penalties, potentially saving taxpayers enormous sums in fees for swap deals that are crippling cities, universities and other public entities across the state."



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Will China Decline ? And how will that play out for America?

This article from FX Trader by Mark A. DeWeaver is one of the best I've read. It hones in at multiple instances to the core of the issue, the disinclination of the powers that be to relinquish any portion of their power or wealth...hence their EGO.
This as he points out will lead them to continue to pursue destabilization techniques that they will promote to fuel a sense of nationalization, distracting the people from their real agenda of control and wealth internally and externally.
As always, keep the minions fed and distracted, give them just enough to keep them happy, point the finger of blame elsewhere, the key to control and power.
This will not work well for the U.S.

Many Americans view China’s emergence as the world’s second largest economy with trepidation.  The US, it seems, is in decline. China is a ‘rising power’ destined to take over America’s role as global hegemon sometime in the not-too-distant future.

Recently, however, China’s prospects are looking less rosy.  Since hitting a post-financial crisis high of 11.9% in the first quarter of 2010, Chinese quarterly GDP growth has risen in just two of the subsequent thirteen quarters.  The latest figure of 7.5%, for the second quarter of this year, is down from 7.7% in the first quarter and 7.9% in the last quarter of 2012.

As the Chinese juggernaut starts to lose momentum, should Americans be breathing a collective sigh of relief?  Not really. Unfortunately, China’s decline is likely to be a lot less peaceful than its rise.

A SUSTAINED DECELERATION

Beijing is hoping to keep the economy on track by transitioning to a new ‘growth model’ based on consumption and productivity gains.  Yet so far there is little evidence to suggest that this strategy is working.  Indeed, there is really no reason to believe that such a transition can be achieved under the country’s current political-economic system.

China’s economic model, like the Soviet model on which it is based, is designed to channel national income into state-promoted investment.  In the initial phases of economic development, this strategy can work because it is relatively easy for planning authorities to identify investment projects that make sense on a cost-benefit basis.  Productivity growth is relatively unimportant and a case can be made for postponing consumption for the sake of rapid industrialization.

In China, this “big push” phase could be said to have ended in the late 1990’s, when excess-capacity problems emerged in many sectors that had previously experienced excess demand.  The country had reached a point at which, as then-premier Zhu Rongji told the National People’s Congress in 2001, “further development would be impossible without structural adjustment.”

Yet structural adjustment has proved elusive.  As the Soviets discovered in the 1980s, a productivity renaissance cannot be brought about by fiat.  Nor are government and state enterprise elites going to allow a significant reduction in the state’s share of the national income pie for the sake of stimulating household consumption.  As long as the economy is dominated by the state, switching to a new “mode of growth” is not a real possibility.

China is now facing a sustained deceleration.  In the absence of any other driver, GDP growth is not going to pick up until investment recovers.  But with the return on investment continuing to decline, such a recovery will prove to be short-lived.

DEFENDING THE MOTHERLAND

Slower growth will pose an existential problem for the Chinese Communist Party.  Ever since the end of the Maoist era in 1978, economic development has been the Party’s primary source of legitimacy.  A prolonged slowdown will weaken its hold on power in much the same way that crop failures during imperial times undermined the emperor’s claim to the ‘mandate of heaven’.  If China is not going to be ‘number one’ after all, some other justification for Party rule will be urgently needed.

The Party’s best bet will be to play the nationalist card, making the defense of the ‘motherland’ its primary mission.  This will not be difficult.  It will be easy to blame China’s economic failures on the machinations of foreign powers, even as Mao Zedong did in his famous speech proclaiming the founding of the People’s Republic in 1949.  The fact that China had “fallen behind,” he said, was “due entirely to oppression and exploitation by foreign imperialism and domestic reactionary governments.”

It will also be easy to put the Chinese economy on a war footing.  China’s central planning institutions are actually better suited to the mobilization of resources for defense industries than they are to the management of peacetime economic activity.  A military buildup would also help to alleviate excess capacity problems in heavy industry.  Total excess capacity in the steel sector, for example, already exceeds total US capacity.  Arms manufacturing is likely to be seen as a good way to put idle plants back online.

AN ACE IN THE HOLE

The implications for China’s neighbors are already evident in Beijing’s increasingly bellicose insistence on irredentist territorial claims.  There have been escalating tensions with Japan over the Senkaku Islands, spats in the South China Sea involving areas claimed by Vietnam, and even a Chinese incursion into an Indian-controlled Himalayan region claimed by both Beijing and New Delhi.

Such incidents are often described as competitions for the control of natural resources such as the South China Sea’s oil and natural gas.  They are, however, better understood as consequences of the Party’s domestic agenda.  And as public relations exercises they have been remarkably successful.  Chinese anti-Japanese sentiment is now at fever pitch, with many of China’s netizens expressing strident support for military action against Japan to recover lost territories, right historical wrongs, and avenge past humiliations.

US policy makers need to realize that this type of nationalist sentiment is going to be the Party’s ace in the hole once the economy slows.  Beijing can therefore be expected to prefer that international disputes remain unresolved.  Its objective will be to keep the Chinese public distracted by possible foreign threats to China’s national security and economic development.

China, not the US, is fated to be the ‘declining power’ for the remainder of this decade.  This means that Washington’s preferred policy of ‘engagement’ will not work.  Beijing will be unable to give ground in disputes with its neighbors because doing so will weaken the Party domestically. Events like last June’s summit between President Obama and General Secretary Xi Jinping are not going to improve US-China relations when the Party’s survival depends on escalating tensions.

Given that dialogue is likely to be ineffective, the US must focus instead on defending its strategic interests in the Pacific. It must continue to strengthen ties with its regional partners, particularly Japan and Taiwan, which are likely to be the main targets of Chinese military adventurism. Most importantly, the US must avoid helping the Party stifle demands for political reforms at home by handing it easy victories abroad.

Mark A. DeWeaver

BBC News - US veterans waited 115 days for care

BBC News - US veterans waited 115 days for care: "Military veterans at an Arizona hospital waited an average of 115 days for a first appointment, a new internal US government report has found.

That's 91 days longer than the hospital in Phoenix reported, says the inspector general for the Department of Veterans Affairs (VA).



 It also said at least 1,700 veterans were not even on waiting lists because they were not properly registered."



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Here Is The Mystery, And Completely Indiscriminate, Buyer Of Stocks In The First Quarter | Zero Hedge

Here Is The Mystery, And Completely Indiscriminate, Buyer Of Stocks In The First Quarter | Zero Hedge: "According to the most recent CapitalIQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter!"



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New Home Sales vs Interest rates - graphic.

Economic Calendar - Bloomberg



Based on the graphic below, their own correlation explanation below it seems out of whack !

Looks to me that Nov-12 was the pivot for both rates and sales and they both went UP not down.

Definition New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.  Why Investors Care

There is no question that lower interest rates boost home sales. Other factors also impact housing decisions, such as employment and income growth, and wealth stemming from stock market gains.  Data Source: Haver Analytics

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The US Shale Oil Miracle Disappears | Zero Hedge

The US Shale Oil Miracle Disappears | Zero Hedge:

At this point, you might be wondering just how the EIA got its estimate so badly wrong. The answer is that the EIA relied on a private firm, one now scraping corporate relations and PR egg off its face:

U.S. officials cut estimate of recoverable Monterey Shale oil by 96%

May 20, 2014

Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California's vast Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

The new estimate, expected to be released publicly next month, is a blow to the nation's oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

The 2011 estimate was done by the Virginia engineering firm Intek Inc.

Christopher Dean, senior associate at Intek, said Tuesday that the firm's work "was very broad, giving the federal government its first shot at an estimate of recoverable oil in the Monterey Shale. They got more data over time and refined the estimate."

(Source)

Wait a minute. The 2011 California shale oil estimate that launched a flotilla of excited "shale miracle" headlines, led the EIA to publish an estimate of the Monterey at 13.7 billion recoverable barrels, and helped to form a national narrative around potential US "energy independence" was done by a Virginia engineering firm?

Okay, well who are they exactly?

Looking at their website, clearly put together using cheesy stock photos, early Internet font formats, and touting the fact that they've been a business "since 1998" doesn't quite project the hoped-for aura of gravitas and seasoned competency:

(Source)

Seriously? A clock in an arch? Typing fingers? A woman gesturing in a meeting and a guy on a phone?

I mean, does anyone other than me have a "no lame stock photos" requirement of the businesses they use to generate the data used to justify a major geopolitical energy realignment? It's the closest thing I have to a hard rule.

Okay, just kidding again....sort of.

At any rate, the bottom line here is that the EIA relied on this firm's back-of-the-envelope calculations which turned out to be -- surprise! -- unreliable. And now, Occidental Petroleum is scrambling to get its assets out of the Monterey and deployed somewhere more promising.

The lesson to be learned here is: don't believe every headline you read. Consider the source, and more importantly -- stock photos or not -- always question the data.

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Boomers Cash In as Bull Market Aids Exodus From Workforce - Bloomberg

Boomers Cash In as Bull Market Aids Exodus From Workforce - Bloomberg:

Crazy Market

“Everyone understands that the market went crazy last year,” said Barish, who advises 155 clients as a partner at Murphy Matza Wealth Management in Raleigh, North Carolina. “If they’re not in love with their career, the natural question is, ‘Can I go?’ That emotion absolutely ebbs and flows with a client’s perceived bottom line.”

The U.S. jobless rate fell below 7 percent at the end of last year for the first time since 2008, helped by an exodus of retirees that has shrunk the labor force, Fujita wrote in his analysis, revised in February. Unemployment dropped even further in April, to 6.3 percent.

Since the start of the bull market in 2009, the number of those 55 and older leaving the workforce has increased by more than 2 percent each year, the fastest clip since the technology bubble of 2000 and outpacing a 10-year average rate of 1.3 percent through 2008, according to the Bureau of Labor Statistics. In 2008, growth for the same age bracket was 1.4 percent, a slower increase than the previous year’s 1.7 percent gain, the data show.

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This Is Why Hewlett Packard Just Announced Another 16,000 Job Cuts | Zero Hedge

This Is Why Hewlett Packard Just Announced Another 16,000 Job Cuts | Zero Hedge:

The biggest scandal was this disclosure in the second quarter results press release: "As HP continues to re-engineer the workforce to be more competitive and meet its objectives, the previously estimated number of eliminated positions will increase by between 11,000 to 16,000." This is in addition to the 34,000 layoffs already noted previously, meaning HP will fire a total of 50,000 in the near future.

Want to know why HPQ is forced to fire so many well-paying jobs it once again makes a mockery of anyone who claims there is some economic recovery going on?

The chart below, which compares the company's quarterly CapEx, declining (so no, not increasing as some clueless sell side analyst hacks claim) by 16% from last quarter and down 4.5% from a year ago to $840 million and thus leading to less growth opportunities for the company and resulting in tens of thousands of pink slips, and the soaring amount of stock buybacks, which rose by nearly 50% in Q2 from Q1 to $831 million and by 27,600% (!) from a year ago, the most since 2011, should provide all the answers

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The Battle For Africa: Chinese Investments Vs US Military | Zero Hedge

The Battle For Africa: Chinese Investments Vs US Military | Zero Hedge:

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Wall Street Finds New Subprime With 125% Business Loans - Bloomberg

Wall Street Finds New Subprime With 125% Business Loans - Bloomberg: "Wall Street Finds New Subprime With 125% Business Loan"



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Cocaine Sales to Boost Italian GDP in Boon for Budget - Bloomberg

Cocaine Sales to Boost Italian GDP in Boon for Budget - Bloomberg: "Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year, a boost for its chronically stagnant economy and Prime Minister Matteo Renzi’s effort to meet deficit targets.

Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said."



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USDJPY Desperate To Drag S&P To All Time High | Zero Hedge

USDJPY Desperate To Drag S&P To All Time High | Zero Hedge:



Following the only major overnight econ event, which was the May German IFO Business Climate Index which dropped from 111.2 to 110.4 missing expectations of 110.9, the USDJPY has been on a soaring rampage higher hoping to push equities along with it (because now that gold manipulation is a proven fact, it is only a matter of time before the link between manipulating the USDJPY on thin volume with massive leverage and rigging the equity market is uncovered too), and at last check was just shy of 102.000. For now equity futures have failed to be dragged along although with the S&P all time high just around the horizon, the psychological level of 1900 staring the rigged market in the face, and the weekend just around the corner, it is virtually assured that the S&P will close at an all time high today - after all the people need to be confident when they go shopping at malls with money they don't have (but delighted by paper profits they haven't booked) so they boost the US non-GAAP GDP (at least before like Italy, the BEA too changes the definition of GDP to include cocaine and hookers). Finally, assuring a (record?) low-volume levitation today is the early closure of the bond pit ahead of Memorial Day holiday which also means only a skeleton crew of algos will be frontrunning each other to push the S&P over 1,900.



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'Smoking Gun' From The Federal Reserve's Murder Of The Middle Class | Zero Hedge

'Smoking Gun' From The Federal Reserve's Murder Of The Middle Class | Zero Hedge:







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BBC - Future - How faecal transplantation is gaining credibility

BBC - Future - How faecal transplantation is gaining credibility:



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Where the World's Unsold Cars Go To Die | Zero Hedge

Where the World's Unsold Cars Go To Die | Zero Hedge: "Above is just a few of the thousands upon thousands of unsold cars at Sheerness, United Kingdom.  Please do see this on Google Maps....type in Sheerness, United Kingdom.  Look to the west coast, below River Thames next to River Medway. Left of A249, Brielle Way."



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At Last, Recovery Heads Where the Fed Wants It - Humor !

At Last, Recovery Heads Where the Fed Wants It:



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Yahoo to YouTube Ads Spreading Viruses Rile Lawmakers - Bloomberg

Yahoo to YouTube Ads Spreading Viruses Rile Lawmakers - Bloomberg: "Users didn’t need to click on any ads on YouTube during the February attack on Google’s network. Just watching a video was enough to get infected, according to the report."



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ECB readies package of rate cuts and targeted measures

ECB readies package of rate cuts and targeted measures: "The tools being prepared are consistent with measures Draghi identified in an April 24 speech in which he explained how the ECB would respond to three broad scenarios."



1.To respond to a de facto tightening of monetary policy caused by market moves like further euro gains, Draghi indicated the ECB could cut rates.



OR - "Thisa Maario here, thisa no problemo...leetle cut here and a leetle cut there." 

Unless it doesn't work as it isn't....except for Germany who masterfully convinced everyone they were opposed to rate cuts and would leave the EU if they began to weaken the Euro. Germany is crushing it, their companys', MB, BMW etc, crushing it. Because they have created an environment where all the other countries like Italy who could never afford their stuff if it was Lira vs DM, can now play pretend until the SHTF.

Rate cuts NO WORKEE.... Ponzi Level 2 below



2.To deal with problems transmitting its policy to all parts of the euro zone, he said the bank could deploy an LTRO targeted at encouraging bank lending or an ABS purchase program.



OR - " Hey, I'm Maario, you wanna somma this. Thisa no QE...yuh" - LTRO - Long Term Refinancing Operation - Ponzi Sauce Level 2 - ECB loans money in exchange for Sovereign Debt at ZIRP ( zero interest rate program) or close and in turn. If debt implodes, TS!, if economy implodes or doesn't recover as expected like here, TS!.



Ponzi Level 3 below...coming up !!



3.Under a third scenario of a deterioration in the medium-term inflation outlook, Draghi said on April 24 the ECB could respond with a "broad-based asset purchase program" - potentially QE.



OR - " Houston, thissa Maario, pleezuh connect me to my boyza atta GS...I havva problemo.."

"Whatchu meen they no givva sheet !!." "Okay then!! I flusha all this ECB sheet right onna yoo!!"



So, now Summer of '10 may be coming to a pretty European village near you. It won't work, the Europeans unlike the lemmings here won't stand for it for too long because they have not been raised to expect the entitled lifestyles people here had and assumed that was a baseline. And frankly, there is a large enough constituency that thinks the EU system sucks.

Play the game right and end up with the Tuscan Villa for about $10K !!!

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Bank Of America - Puts Sell on Gold at $1300. May 2014

Bank Of America Would Like To Buy Your Gold, Seeing "No Gains Above $1315" | Zero Hedge:

BofAML notes...

It is time to sell Gold. The range trade / consolidation of the past month is drawing to a conclusion. Further gains should not exceed 1315.70 (May-05 high) AND CAN'T EXCEED the Mar-14 high at 1331. Downside targets are seen to 1215.

Sell Spot Gold at market (1300), risking 1325, targeting 1215, potentially below.

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