by Grant Smith and Julian Lee at Bloomberg Iraq is taking OPEC’s strategy to defend its share of the global oil market to a new level. The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut…

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On Tuesday, Greece postponed a scheduled Eurogroup meeting in Brussels without offering a reason as officials conducted “preparatory” discussions and held an evening teleconference with creditors. Face-to-face meetings will take place today with just 9 days to go until June 5 when Athens will miss a payment to the IMF, triggering an unprecedented default the repercussions of which no one can accurately predict. 

Also on Tuesday, Greek FinMin Yanis Varoufakis allegedly told Greek reporters that one measure under consideration to help stem the outflow of deposits from Greek banks was a levy on ATM withdrawals designed to encourage the use of credit cards over cash, a rather ironic suggestion coming from a government crippled by debt. The Finance Ministry was quick to deny that such a levy was being considered because after all, one way to ensure that ATM lines will get quite a bit longer is to suggest that depositors will soon be subject to a levy on withdrawals. Unfortunately, it appears as though the move to dispel the ATM tax “rumor” came too late because according to Kathimerini, deposit flight accelerated meaningfully on Tuesday. Here’s more

Statements suggesting the imposition of capital control measures over the upcoming long weekend, and Tuesday’s reference by the Finance Ministry to the possible imposition of a levy on cash machine withdrawals – later withdrawn – sent many to the ATM. At the same time, bank officials point to widespread concerns about the possibility of a rift between Greece and its creditors over the government’s failure to repay a scheduled installment to the International Monetary Fund next week.


Credit sector professionals reported that deposit outflows on Tuesday alone came to 300 million euros, against about 100 million euros per day in recent days. They said that while this amount is quite high, the situation is under control as citizens are remaining calm on the positive messages from Greek officials.


On Wednesday the ECB board is expected to decide on a fresh extension of the ELA mechanism following the addition of another 200 million euros last week to a total of 80.2 billion euros. Although pressure by certain ECB council members for a tougher stance toward Greece has grown, sources agree that the ECB will probably avoid making any decisions that could trigger any major developments.

Or perhaps not, because as it turns out, the ECB did not in fact raise the cap on the emergency liquidity lifeline that’s keeping the Greek banking sector afloat, opting instead to keep the ceiling unchanged at €80.2 billion which leaves banks with about €3 billion in remaining liquidity.

Ironically, the ECB cited “very limited deposit withdrawals over past week” as the reason for its decision suggesting that either Greek bank officials are lying about the severity of the outflow or Mario Draghi is deliberately tightening the screws in an effort to help creditors extract concessions from PM Alexis Tsipras. The prevailing assumption had been that the central bank would continue to incrementally raise the ELA cap (the average weekly increase had been around €1.5 billion before last week’s €200 million hike) until Greek banks exhausted their available collateral, said to amount to around an additional €13 billion. That would have allowed banks to offset deposit outflows through the end of July. Now, that assumption looks to be questionable. As a reminder, here’s what the cash situation looks like:

Meanwhile, some officials have now thrown in the towel, with Bloomberg reporting that a deal will not be reached by the end of this month as Greece is “nowhere close” to striking a compromise that’s acceptable to the IMF and the EU:


This will come as no surprise to regular readers who will recall that the IMF and the European Commission are now keen to send a strong message in terms of granting no concessions in talks with Greece after anti-austerity parties staged an electoral coup in Spain in Sunday's regional and municipal vote. By making an example of Greece, the troika can effectively discourage other democratically elected governments from pursuing similar mandates and indeed, we're now seeing commentary that suggests giving in to Greece's demands would be worse than Grexit. 

Via Bloomberg (note that this is a Portuguese daily interviewing a German official):

The risk of contagion from Greece exiting the euro area is smaller than it was a few years ago, Christoph Schmidt, head of the German government’s council of economic advisers, is cited as saying in an interview done last week with Diario Economico.


Fearing a Greek exit to the point of accepting all the conditions that the Greek government demands would be a lot worse than an exit, paper cites Schmidt as saying.

And BlackRock has a similar message to the Greeks:

A Greek exit from the euro area is less disastrous than making concessions, Het Financieele Dagblad reports citing an interview with BlackRock CEO Larry Fink.


Says that if concessions are made, other countries may also demand them.


As an investor, he would be reassured by a decisive Europe.


Says it’s unacceptable Alexis Tsipras wants to reverse earlier agreements on reforms.

It's now abundantly clear that the IMF, Brussels, and Berlin will accept nothing less than a wholesale abandonment of Syriza's anti-austerity platform if Tsipras intends to walk away with a deal. Short of that, Syriza will be left to fight for their political life amid what will surely be a catastrophic economic collapse should the country be forced to revert to a parallel currency.

Either way, Greece's creditors will have achieved their goal of using financial leverage to suppress the anti-austerity germ — for now.

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Overnight Media Digest


* U.S. businesses, under pressure from activist investors, are plowing more cash into dividends and stock buybacks, fueling worries about long-term investment. (

* While shareholders cheered news that Time Warner Cable and Charter Communications would combine, some Time Warner Cable bondholders were wary of the debt load the combined company will shoulder. (

* U.S. authorities are preparing to unveil a criminal indictment against officials of soccer's international governing body that will detail allegations of widespread corruption. (

* Coca-Cola Co is expected to soon close its deal to take a 16.7 percent stake in energy-drink maker Monster Beverage Corp. (

* The Internal Revenue Service said identity thieves used one of its online services to obtain prior-year tax return information for about 100,000 U.S. households. (



U.S. Securities and Exchange Commission said Deutsche Bank had failed to account for a "material risk for potential losses estimated to be in the billions of dollars", thereby inflating its value at the height of the financial crisis.

Elon Musk-owned SpaceX won a contract to launch U.S. spy satellites, after the U.S. Air Force certified its Falcon 9 rocket to participate in government missions.

Sky has committed 18 million euro ($19.6 million) to make shows and finance events for audiences in the UK, Ireland, Italy, Germany and Austria, in a bid to compete with Netflix .

French luxury goods group LVMH said it had entered into exclusive negotiations with Amaury Group to buy French daily Le Parisien.



* Criminals gained access to past tax returns of more than 100,000 people through an application on the Internal Revenue Service's website and used personal information to claim $50 million in fraudulent refunds, the agency said (

* ReCode, the news website led by the veteran journalists Walt Mossberg and Kara Swisher, is being acquired by Vox Media, a deal that reflects the turmoil among digital organizations focused on covering the tech industry. (

* The Securities and Exchange Commission had claimed that Deutsche Bank AG "overstated" the value of a multibillion-dollar portfolio of derivatives during the height of the financial crisis. The bank, without admitting or denying wrongdoing, agreed to pay a $55 million penalty to the S.E.C to settle claims that its "inadequate internal accounting controls" violated federal securities law. (

* Federal prosecutors in Manhattan are seeking a lengthy prison sentence for the creator of Silk Road, a once-thriving website that allowed users to anonymously buy and sell heroin, cocaine, LSD and other drugs online until it was shut down by the authorities in 2013. (

* Accused of accounting tricks to defraud lenders, three former executives of the law firm of Dewey & LeBoeuf instead blamed "greedy" lawyers who took clients, hastening the firm's demise. (




** Air Canada says the funding of its pension plan has improved enough that it can opt out of a pension agreement with the federal government - a move that allows it to pay dividends and buy back shares. (

** U.S.-based Kinder Morgan is proposing an increase of roughly 8 percent to fees paid by oil company shippers to bolster the industry's ability to respond to a large marine oil spill, according to documents filed with regulators. (

** The Canadian government is refusing to make public the assessments it conducts to determine whether Ottawa's C$15 billion ($12.05 billion) arms deal with Saudi Arabia is compatible with foreign policy or poses a risk to the civilian population in a country notorious for abuse of human rights. (


** In one of the first major acquisitions in the Canadian oil patch since the collapse in oil prices, shale giant Crescent Point Energy Corp is buying its smaller competitor Legacy Oil and Gas Inc in a C$1.53 billion ($1.23 billion) share and debt deal. (

** The Wynne government moved on Tuesday to ban flavored tobacco, regulate e-cigarette smoking and place calorie counts on restaurant menus in an effort to make Ontarians healthier. (

** Toronto-Dominion Bank continued to display an appetite for U.S. consumer credit card portfolios by swallowing up high-end retailer Nordstrom Inc's U.S. Visa and private label business and its C$2.2 billion ($1.77 billion) in receivables on Tuesday. (




- New trading accounts opened for Shanghai and Shenzhen A-share stock markets hit 2,621,395 last week, up 10.1 percent from a week earlier, and the number of actively traded accounts rose 10 percent, data from China Securities Depository and Clearing Corporation Limited showed.


- Zijin Mining Group Co will resume trading on Wednesday and it plans to raise up to 10 billion yuan ($1.61 billion) to invest in overseas gold and copper mines.


- China will never pursue expansion, and its military policy is "defensive in nature," the paper said in an editorial after the country released a policy document issued by the State Council on Tuesday.

- Yanji, a city in the eastern Jilin province, has opened a "morality" bank for people to open accounts and collect moral points in exchange for free services such as haircuts and home cleaning, the paper said, citing a community official



The Times

The Financial Conduct Authority has fined Stewart Ford, the founder and chief executive of Keydata, the failed investment firm, 75 million pounds ($115.43 million) after tens of thousands of people lost out as a result of the poor performance of the bonds. (

The Irish government has accepted a bid for its 25.1 percent stake in Aer Lingus from International Airlines Group that values the former national carrier at 1.4 billion euros ($1.52 billion). (

The Guardian

Greece could secure vital weeks to negotiate a rescue deal with its creditors if Athens is able to delay repayments worth 1.6 billion euros to the International Monetary Fund, as critical deadlines approach. (

Power sharing in Northern Ireland entered a new crisis on Tuesday when a bill to reform the region's welfare system was shot down by nationalist parties. The failure to push legislation through the Stormont assembly leaves the Northern Ireland executive with a 600 million pound black hole in its budget. (

The Telegraph

New research has found that many sellers, who watched annual house price growth in London gradually slow over the last nine months, have now kick-started the sales process, banking on heightened demand following the election and a seasonal increase in what the buyer is willing to pay. (

Banker Tom Hayes, described as the "ringmaster" of a cartel of powerful traders, made 4.8 million pounds ($7.39 million) rigging interest rates that influence loans and other contracts while working at UBS and Citigroup, the Southwark Crown Court heard. (

Sky News

Charter Communications has confirmed a $56.7 billion deal to take over Time Warner Cable, creating one of the largest TV and internet providers in the U.S. (

David Peattie, who took over as chief executive of Fairfield Energy in 2011, is to leave the company in the wake of its announcement that it is to decommission its Dunlin Alpha platform. (

The Independent

The Financial Conduct Authority's income from fines is set to fall short of a record for the first time since 2011, despite announcing two of the three biggest penalties ever imposed on financial firms operating in Britain within the past month. (

Jony Ive, the British man behind the design of Apple's best known products from the iMac to the iPod to the Apple Watch, has been promoted from his previous position of senior vice president of design. (

While Gartman's immaculate accuracy at suggesting market directionality served everyone well yesterday, today the "opposite oracle" is cloudy, which may explain why thus far futures are broadly unchanged. To wit:

SHARE PRICES HAVE FALLEN VERY SHARPLY IN THE PAST 24 HOURS, as eight markets of the ten comprising our International Index have fallen and as five of those eight have fallen by more than 1%. Our Index has lost 107 “points” or 0.9% and had it not been for strength once again in the market in mainland China our Index would have been down by more than 1%.


We begin then by saying without equivocation that we have changed our mind again regarding equities, having chosen in the few hours after sending yesterday’s TGL that as the bond market began to strengthen and as the equity markets in Europe began very seriously to weaken… weakening sufficiently enough yesterday for us to recommend exiting long positions established two weeks ago in the EUR STOXX 50 index for a small but important profit…and as the dollar shifted into very high gear to the upside, that something was changing in the psychology of the equity market that caused us to take action. Hence in our retirement funds here we reduced very slightly our long position in Apple directly and then wrote near-the-money calls  against the remaining position. Further, we sold just out-of-the money calls against the “tanker” shares we owned, and we used the money taken in from those calls to buy more derivatives sufficient to take us back to market neutrality. This may have been an error on our part; time only shall tell, but for the moment that appears to have been the  wise course of action.

And not even Virtu algos know what the market opposite of neutral is.

It had been a painfully quiet session in Asia (where Chinese levitation continues with the Shanghai Composite up another 0.6% oblivious of yesterday's rout in the US, because as we explained for China it is now critical to blow the world's biggest stock bubble) and Europe, where the only notable news as that for the first time in months the ECB had not increase the Greek ELA, keeping it at €80.2 billion on conflicting reports that Greek deposit withdrawals had halted even as Kathimerini said another €300MM had been pulled just yesterday, suggesting the ECB has reached the end of its road when it comes to funding nearly two-thirds of what Greek deposits are left in local banks. But the punchline came moments ago when Bloomberg reported that "Greece will likely miss a deadline for a deal with creditors by the end of the week as the two sides have made little progress during talks in recent days."

The completely "unexpected" news in turn sent the EURUSD sliding back under 1.09 after a brief rebound to a high of 1.0925 overnight. And speaking of FX, moments ago the USDJPY surged to 123.69, a new post-2007 high. In short: the USD rampage continues following the best week in years, and it remains to be seen if this will lead to another US equity and commodity selloff like yesterday, or if today Gartman flopped to bearish, and suddenly a rising dollar is good for stocks again.

Elsewhere in bond markets, Germany had another quasi-failed 30Y auction, receiving just €1.5 billion in buds will below the €2 billion target, selling €1.424 billion of 2.5% 30Y bonds in the final tally.

A closer look at markets shows a European session which has been particularly light in terms of newsflow and data, with major equity indices (Eurostoxx: 0.4%) in the green paring back some of yesterday’s Greece inspired losses. The only notable news regarding Greece from the European morning has been source comments stating the ECB are to keep Greek ELA ceiling on hold at EUR 80.2bln due to a slowdown in withdrawals over the past week, with the ECB also keeping haircuts on Greek collateral unchanged.

In early trade the USD gave back some of yesterday’s gains amid the light European session, bolstering both EUR and GBP but later pared its initial weakness to trade relatively flat. However USD/JPY remains above the 123.00 handle and near 8 year highs with analysts at JP Morgan suggesting a medium term rise in the pair looks set to continue after breaking above the critical 122.04 resistance level yesterday, with the next notable long term target being the 124-126 range.

In terms of Central Bank speakers, overnight Fed vice-chair Fischer (voter, soft dove) said the Fed could decrease the pace of rate hikes if world economic growth declines while Fed's Lacker (voter, hawk) reiterated that June is a good time to begin considering raising interest rates.

Looking ahead, the notable event of the session will be the BoC rate decision, with participants also looking out for bond  auctions from both UK and Germany as well as any Greek comments from today’s G7 meeting.

The weaker greenback has led to strength in the energy sector after yesterday’s slump as prices fell to a 1-month low and recorded their worst day in over 2-months. While the metals complex has seen less of a paring of yesterday’s moves, with spot gold remaining down almost USD 20 on the week.

After yesterday's macro economic data deluge, there is little on the US econ calendar with just Mortgage Application data shortly.

In summary: ECB Said to Leave Emergency Aid Level for Greek Banks Unchanged. The Italian and Spanish markets are the best-performing larger bourses, German the worst. The euro is stronger against the dollar. Japanese 10yr bond yields fall;  German yields increase. Commodities gain, with wheat, corn underperforming and WTI crude outperforming. U.S. mortgage applications due later.

Market Wrap

  • S&P 500 futures little changed at 2105.8
  • Stoxx 600 up 0.5% to 405.5
  • US 10Yr yield up 2bps to 2.16%
  • German 10Yr yield up 1bps to 0.56%
  • MSCI Asia Pacific down 0.7% to 152.1
  • Gold spot down 0.2% to $1185.4/oz
  • Asian stocks fall with the Shanghai Composite outperforming and the Kospi underperforming; MSCI Asia Pacific down 0.7% to 152.1
  • Nikkei 225 up 0.2%, Hang Seng down 0.6%, Kospi down 1.7%, Shanghai Composite up 0.6%, ASX down 0.8%, Sensex up 0.1%
  • Euro up 0.26% to $1.0901
  • Dollar Index down 0.09% to 97.22
  • Italian 10Yr yield up 1bps to 1.95%
  • Spanish 10Yr yield up 1bps to 1.87%
  • French 10Yr yield up 1bps to 0.86%
  • S&P GSCI Index up 0.3% to 433.8
  • Brent Futures up 0.7% to $64.2/bbl, WTI Futures up 0.8% to $58.5/bbl
  • LME 3m Copper little changed at $6107/MT
  • LME 3m Nickel down 0.1% to $12665/MT
  • Wheat futures down 1.1% to 488 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

G-7 finance ministers and central bankers meet in Dresden, Germany

ECB are to keep Greek ELA ceiling on hold at EUR 80.2bln due to a slowdown in withdrawals over the past week, with the ECB also keeping haircuts on Greek collateral unchanged

Today’s European session has been particularly light in terms of newsflow and data, with major equity indices in the green paring back some of yesterday’s Greece inspired losses

Looking ahead, the notable event of the session will be the BoC rate decision, with participants looking out for any Greek comments from today’s G7 meeting

Treasuries decline before week’s auctions continue with $35b 5Y, WI 1.545%, highest since Dec., from 1.380% in April.

Greece will likely miss a deadline for a deal with creditors by the end of the week as the two sides have made little progress during talks in recent days, four international officials familiar with the matter said

ECB left Emergency Liquidity Assistance ceiling for Greek lenders unchanged at EU80.2b, will also leave haircut on Greek collateral unchanged, according to two people familiar with the matter

RBS could pay as much as $4.5b to resolve claims of misconduct in its handling of agency MBS, according to Bloomberg Intelligence

Obama’s executive action on immigration, which would allow 5m undocumented immigrants to remain in the U.S., was dealt a serious blow as federal judges ruled the effort must remain on hold while 26 states sue to overturn it

Yellen plans to skip the annual gathering of economists and policy makers in Jackson Hole, Wyoming, this year, a     spokeswoman for the central bank in Washington said

Chinese stocks rose for a seventh day, with the Shanghai Composite Index flirting with the 5,000 level on gains for commodity and power producers

Sovereign bond yields mostly lower.  Asian stocks gain; European stocks, U.S. equity-index futures gain. Crude oil higher; copper, gold little changed

US Event Calendar

  • 7:00am: MBA Mortgage Applications, May 22 (prior -1.5%)
  • 1:00pm: U.S. to sell $35b 5Y notes

DB's Jim Reid concludes the overnight wrap

The market was dazzled yesterday by a rare (by recent standards) day of better than expected US data which ironically coincided with one of the best days of the year for US Treasuries as 10yr and 30yr yields fell 7.0bps and 8.6bp respectively. Over the last few weeks US yields have generally edged higher in spite of weak data. Perhaps yesterday there was a feeling that the earlier the Fed rise the less they might end up doing or being allowed to do. However pre-US numbers there was already a reasonable global fixed income flight to quality bid as Greece continued to worry investors, and the Spanish election results continued to gently reverberate. We also heard from Fed VC Fischer who suggested the pace of Fed rises could be slower than expected if the global economy was weaker than anticipated. This is a little bit like saying that if you put on weight after a suit fitting then the suit won't fit you but hey it seemed to attract attention.

The batch of better data also supported a strong bid for the Dollar as the DXY rose 1.34%, although much like the Treasury move the index was already firming in the European session before marking its highest level in nearly a month. That strength didn’t help equity markets as the S&P 500 and Dow declined -1.03% and -1.04% respectively with energy stocks (-1.58%) leading the losses after a tumble for Brent (-2.75%) and WTI (-2.83%). Gold was also a notable decliner after falling 1.60% to close at $1187/oz. The flight to quality bid was evident in core European bond markets as 10y Bunds ended -5.6bps at 0.544%, while similar maturity yields in France (-3.9bps), Sweden (-6.2bps), Netherlands (-4.3bps) and Switzerland (-3.7bps) all fell. There was clear weakness in the periphery however as 10y Italy (+9.3bps), Spain (+9.5bps) and Portugal (+10.0bps) yields all rose as the Greece/Spain combination added some nervousness to the morning session. European equity markets largely mirrored their US counterparts as the Stoxx 600 (-0.73%), DAX (-1.61%) and CAC (-0.66%) all fell.

In terms of the details on yesterday’s data, it was the April durable goods report which generated much of the headlines. Despite an, as expected, -0.5% mom headline reading, the ex transportation print rose a greater than expected +0.5% mom (vs. +0.3% expected) and the core capex orders rose +1.0% mom, also ahead of expectations of +0.3% with a decent upward revision to the March reading (+1.5% mom from -0.5% previously). Core shipment orders (+0.8% mom vs. +0.2% expected) also saw a similar beat. Other notable releases included a decent jump in the May consumer confidence index, the reading rising 1.1pts (albeit from a downwardly revised March print) to 95.4 (vs. 95.0 expected). New home sales data was also encouraging for April as sales rose +6.8% mom (vs. +5.6% expected) to an annualized rate of 517k, backing up the recent strong housing starts and building permits data. Elsewhere, we also got some now slightly outdated house price data with the March FHFA house price index (+0.3% mom vs. +0.7% expected) and S&P/Case-Shiller index (+0.95% mom vs. +0.90% expected) slightly more mixed. Meanwhile, there was some softness to come out of the flash PMI’s for May as the services print fell 1pt to 56.4 (vs. 56.5 expected) to the lowest reading since January. In turn this meant that we saw the composite fall 0.9pts to 56.1 – also a four month low. Finally, manufacturing indicators were somewhat contrasting for May. The Richmond Fed manufacturing index jumped 4pts to 1 (vs. 0 expected) for the month while the Dallas Fed manufacturing activity index fell 4.8pts to -20.8 (vs. -12.4 expected), the lowest reading since June 2009 although the details suggested a rosier picture for expectations of future business conditions.

Following yesterday’s stronger durable goods orders data, the Atlanta Fed GDPNow model raised its Q2 GDP estimate to +0.8% from +0.7% previously, although the level is still well behind the current market consensus. The data yesterday did little to move the dial on Fed Funds contracts with the Dec-15, Dec-16 and Dec-17 contracts 5bps, 5bps and 4bps lower in yield respectively. Back to Fischer’s comments quickly, as well as noting that the pace of tightening may slow in the face of weaker than expected global growth, the Fed VC also noted that ‘the actual raising of policy rates could trigger further bouts of volatility, but my best estimate is that the normalization of our policy should prove manageable’. After market hours we also learned that the Fed’s Yellen will not be participating at this year’s Jackson Hole event on August 27th-29th, important perhaps for those who were hoping that the meeting could provide some clues ahead of the potentially pivotal September FOMC meeting.

In terms of the follow up in markets in Asia this morning, bourses are largely tracking the weakness in the US and trading lower as we type. The Hang Seng (-0.57%), Kospi (-1.56%) and ASX (-0.78%) in particular have declined. China equity markets are a tad more mixed however, with the CSI 300 -0.49% lower but the Shanghai Comp +0.16%, supported partly by April industrial profits data for the region which showed a +2.6% yoy rise in April and the first positive print since September last year. Meanwhile in Japan, the Nikkei (+0.24%) has reversed earlier losses after BoJ Governor Iwata said that the Central Bank ‘currently expects that the CPI rate is likely to reach around 2% in the first half of fiscal 2016’. Iwata noted that this timing is somewhat delayed from the previous projection, but that the underlying trend in inflation itself has been rising steadily with QQE working as envisaged.

Moving on, talks continued between Greece and its creditors again yesterday but appeared to yield similar results with little suggestion of any material progress or agreement being made. Instead, we heard from Finance Minister Varoufakis who played down fears that the June 5th IMF repayment won’t be made, instead saying that he expects a deal to be made by then which will subsequently release funds for the government to repay its obligations. There were also suggestions, according to the WSJ, that the Greek government has issued a decree ordering the transfer of funds in inactive bank accounts of public sector bodies to be transferred to the Bank of Greece in a bid to raise funds, as well as a proposed tax on undeclared deposits abroad in a sign of how tight the cash position is. In a report put out by the MNI meanwhile, the EC’s Juncker reiterated that June is an ‘obvious deadline’ and that he ‘will do everything to avoid scenarios that include capital controls’. Juncker then went on to say that Greek PM Tsipras is ‘becoming increasingly responsible’ before then questioning his party colleague Varoufakis by saying that he is ‘not helping the process’. Greek officials are due to meet today in Brussels while the saga is expected to be a talking point at the 3-day G7 meeting beginning today.

Following on from the weekend’s regional and local elections in Spain, DB’s Marco Stringa yesterday published a report looking at the impact of what this may now mean for Spain. Marco notes that Spain’s economy is outperforming most euro-area economies and that maintaining medium-term success depends on maintaining economic and political equilibria. Sunday’s local election for the most part confirmed the recent trend in opinion polls that have pointed to an unprecedentedly fragmented parliament and a potentially fragile government. He expects difficult negotiations to now commence and potentially unstable local governments which as a result means we shouldn’t see much improvement in regional deficits (and therefore the general fiscal deficit). Importantly however, Marco notes that this should not necessarily be taken as a map of what will happen after the year-end election. After the general election, the newer parties may have a greater incentive to cooperate and form a coalition. Besides this, both opinion polls and Sunday’s local elections suggest that the likelihood of Podemos being the predominant parliamentary force has decreased materially in his view.

Looking at the day’s calendar, it’s fairly quiet on the whole with the start of the G7 Meeting of finance ministers and central bankers in Dresden potentially generating some Greece related headlines. Aside from that, data wise we’ve got just consumer confidence data for both Germany and France due. After a busy afternoon yesterday for data in the US, there are no notable releases due this afternoon.

Some of the stocks that may grab investor focus today are:

Wall Street expects ...

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Brown Shoe Company, Inc. (NYSE: BWS) is estimated to report its ...

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by Keith Weiner


"The top 25 hedge fund managers made more than all the kindergarten teachers in the country," declared President Obama in a discussion of poverty at Georgetown University. Calling them “society’s lottery winners,” he proposed to hike their taxes.

Predictably, battle lines have been formed between two polarized sides. One side—let’s call them the Gauche for convenience’s sake—is unhappy with the pay disparity. CBS News, in an almost neutral tone, asks, “Which group provides more value to America?” The reader is supposed to somehow answer that question, presumably in favor of teachers. Gawker goes much farther, calling hedge fund managers the biggest gangsters of all. It asserts, “It is, as the myth goes, capitalism at its most pure…”

The other side—let’s call them the Adroit—defends hedge fund managers. PJ Media said, “That single comment [about winning the lottery] defines the president’s economic worldview. Success doesn’t come to those who act rationally in pursuit of their values. It doesn’t come from hard work performed intelligently.”

Both sides get it partly correct and partly in error. The Gauche correctly observe something monstrously unfair: ever-larger financial profits accruing to an ever-shrinking group. However, their basic assumption is false. We do not have capitalism today. And their policy is the same old cliché: soak the rich.

The Adroit are also correct about something. More taxes will not help anyone, and making money is not a lottery. However, in their desire to oppose the other team, they are missing the elephant in the room—rising assets, and falling yields. They too assume that we have capitalism. The reality is that all capital markets are massively distorted. Getting rich isn’t blind luck, but sometimes it’s not properly earned either.

Capitalism means free markets, the opposite of central planning. How could anyone look at our financial system and call it a free market? We have central planning of the most fundamental price in the economy: the rate of interest. Central banking is a key feature, not of capitalism, but of socialism. Indeed in The Communist Manifesto, Karl Marx states, “5. Centralization of credit in the hands of the State, by means of a national bank…”

Every major country in the world has a central bank. All are caught up in the same megatrend—falling interest rates. A lower rate means rising bond prices. For more than three decades, we have had a relentless, ferocious bull market in bonds. Bond speculators have pulled down trillions.

By a variety of mechanisms, the rising price of bonds bleeds into other markets and causes stocks and real estate to rise. For example, when the Fed buys bonds, then the sellers usually buy other assets.

The freefall in yields harms wage earners. How are you supposed to save for retirement with zero interest, and therefore no compounding? And it strangles pensioners, who can no longer live on the interest on their savings.

It is a fact that we have central planning today. While this harms people who are working or retired, it seems to help those who own assets—and their fund managers. A falling interest rate converts everyone’s wealth into their income, which is an unsustainable process.

Rather than arguing about whether hedge fund managers or teachers should make more, we should condemn this unfair system. We are against central banking and central planning, not those who make money. It’s impossible to tell what a fund manager should be paid, other than in a free market.

Don’t hate the player, hate the game.


This article is from Keith Weiner’s weekly column, called The Gold Standard, at the Swiss National Bank and Swiss Franc Blog

Submitted by David Stockman via Contra Corner blog,

It is not surprising that in a few short months Yanis Varoufakis has proven himself to be a thoroughgoing Keynesian statist. After all, what would you expect from an economics PhD who co-authored books with Jamie Galbraith? The latter never saw an economic malady that could not be cured with bigger deficits, prodigious printing press “stimulus” and ever more intrusive state intervention and redistribution.

In what is apparently a last desperate game theory ploy, however, Varoufakis has done his countrymen, Europe and the world a favor. By informing his Brussels paymasters that they must continue to subsidize his bankrupt Greek state because it is the only way to preserve the European Project and vouchsafe the Euro, the Greek Finance minister blurted out the truth of the matter, albeit perhaps not intentionally:

“It would be a disaster for everyone involved, it would be a disaster primarily for the Greek social economy, but it would also be the beginning of the end for the common currency project in Europe,” he said.


Whatever some analysts are saying about firewalls, these firewalls won’t last long once you put and infuse into people’s minds, into investors’ minds, that the eurozone is not indivisible,” he added.

He sure got that right. People who believe in democracy and economic liberty anywhere in the world should pray for a Graccident. During the next several weeks, when $1.8 billion in IMF loans come due that Greece cannot possibly pay, there will occur a glorious moment of irony for Syriza.

If it holds firm to its leftwing statist agenda and takes Greek democracy back from the clutches of the EU/IMF apparatchiks, Syriza will strike a blow for democracy and capitalism in one great historic volte-face. That is to say, defiance of the Germans and the troika would amount to a modern monetary Marathon; it would trigger a thundering collapse of the ECB and the cancerous superstate regime built upon it in Frankfurt and Brussels—–and, along with it, cast a mortal blow upon the worldwide Keynesian central banking regime, too.

The hour comes none to soon. In a few short years under Draghi and in the context of Europe’s fiscal and economic enfeeblement, the ECB has been transformed into a hideous reverse Robin Hood machine. So doing, it has gifted financial gamblers and front-runners with hundreds of billions of ill-gotten gains in the euro debt markets.

In the days shortly before Draghi issued his “whatever it takes” ukase, for example, the Italian 10-year bond was trading at 7.1%. So speculators who bought it then have made a cool 350% gain if they were old-fashioned enough to actually buy the bonds with cash. And they are laughing all the way to their estates in the South of France if their friendly prime broker had arranged to hock these deadbeat Italian bonds in the repo market even before payment was due. In that case, Mario’s front-runners are in the 1000% club and just plain giddy.

While it is extremely difficult to think of a reason that would justify such wanton redistribution to financial gamblers, the ECB rationale is so astoundingly threadbare as to be laughable. In a word, Draghi and his minions claims that Europe’s economic torpor stems from too little inflation and too little borrowing by private households and businesses. Hence, they have no choice except to drastically falsify prices in Europe’s entire $20 trillion bond market in order to rekindle 2% inflation and get economic growth off the flat line.

Oh, puleeze. The Eurozone economies have had no problem whatsoever in generating an ample quotient of inflation ever since the inception of the single currency—-as if that had anything to do with the growth of real production and wealth anyway.

In fact, the european CPI has gained an average of 2.1% per annum during the last decade and one-half. Self-evidently, the temporary flattening of the inflation curve in the last year is a consequence of the plunge of oil and other commodity prices, not anything that could possibly account for Europe’s languishing growth rate.

Historical Data Chart

In fact, the euro area core CPI is up by nearly 1% during the last year, and has gained about 1.5% per annum during the past eight years during which time global oil prices have soared and collapsed twice. Quite simply, low-flation is a myth invented by the Keynesian money printers to justify massive monetization of the public debt.

Historical Data Chart

So there is really nothing behind the low-flation mantra except the spurious argument that consumers will defer purchases unless assured that prices will continue to rise and eat away at their paychecks.

No, Mario, European consumers are not spending owing to the fact that their incomes are not growing. Household “demand” is tepid because take home pay everywhere in the eurozone is being eviscerated by high taxes. And consumers are not borrowing because their balance sheets are already saturated with more debt than they can sustain.

Indeed, private sector borrowing nearly tripled during the decade before the financial crisis. That it has flattened out since then only means that the supply of credit worthy borrowers has been exhausted, not that there exists some mysterious economic malady that can be cured by the ECB’s printing press.

Stated differently, even after accounting for the stagnation of loan growth in the last few years, private sector loans outstanding still represent a 6.0% per annum gain since 1997. And that compares to an average nominal GDP growth rate in the eurozone countries of just 3.3% annually. At some point, every debt addicted economy runs out of balance sheet runway——a condition that Europe attained long ago.

Historical Data Chart

The good thing is that this whole misbegotten euro project cannot survive the impending Greek default. The ECB alone is now on the hook for $138 billion of Greek liabilities—–an amount that is equal to the remaining deposits in its entire banking system. Needless to say, when the impending “Graccident” explodes onto the front pages, there will be pandemonium at the ECB, and in Brussels and capitals throughout the 19-nation Eurozone.

Did the German politicians and voters really understand that their Bundesbank representatives in Frankfurt were not ferocious watchdogs of monetary rectitude after all; and that in crab-like fashion they backed their nation’s central bank into $35 billion of liabilities——–debts that are owed by a Greek banking system and central bank that is hopelessly insolvent?

No, the Greek banking system is actually such a complete financial zombie as to make the US savings and loan industry of the late 1980s look like a paragon of financial health in comparison.  For crying out loud, most of the Greek banking system’s so-called “capital” consists of deferred tax assets; and the collateral posted for its $87 billion of ELA loans consists of  the debt and guaranteed bonds of a Greek government that is self-evidently insolvent.

Never has such a gargantuan scam been pulled off in plain sight by official national and superstate institutions. Never has a central bank accepted such outright financial trash as collateral for massive advances to its member banks.

Yet week-by-week the clueless apparatchiks in Frankfurt have been metering out a couple of billions of ELA funding to keep the Greek banking zombie alive. When the scam finally blows, there will be a witch-hunt in the halls of the ECB’s grandiose new $2 billion palace like Europe hasn’t seen in generations.

Source: @FGoria 

The fact is, the ECB can’t survive the coming Graccident. It will not only be technically insolvent, but, more importantly, it will also be stripped of every vestige of credibility. How in the world, it will be demanded, did Draghi and his clueless posse loan $138 billion to the massively insolvent banking system of a bankrupt economy which is on the verge of economic and civic anarchy?

Moreover, it will also become swiftly evident that there was no Draghi miracle at all—-just a giant, preposterous con job. Accordingly, the front runners parade of the last three years will turn into a panicked selling rout among the fast money gamblers who have made a killing on paper, and the dim-witted bond managers and European bank investors which went along for the ride.

The truth is, Europe is a socialist fiscal time bomb waiting to explode. There is not one honest price left in the European sovereign debt market, including the 10-year German bund trading at 58 bps. Its all been an illusion conjured by the foolish Mario Draghi, who had no clue that all that soaring peripheral debt about which he was taking endless victory laps was actually being rented by the day by heavily leveraged speculators with their fingers on the sell button.

In short, when the taxpayers of Europe wake up to the $350 billion euros they have loaned the bankrupt state of Greece, and when the feckless politicians of Spain, Italy, Portugal, France and much of central Europe discover they can’t fund their bloated state budgets with 1% money after all, the financial furies will be unleashed throughout the continent.

Nor is there any hope for escape. The euro-19 area is now close to having a 100% debt to GDP ratio, and that’s flattered by German surpluses from an export boom that is rapidly cooling, and the fact the for a few quarters Mario’s printing press has conferred huge interest rate subsidies on their depleted fiscal accounts.


Historical Data Chart

The pending Graccident will puncture that illusion, tipping most of Europe into acute fiscal crisis and political upheaval of the type that has already roiled Greece and was starkly evident in Spain’s elections last weekend. The odds that the European superstate and the ECB’s Keynesian monetary regime will survive the resulting upheaval are, thankfully, somewhere between slim and none.

And there is a silver-lining, too.  Someday the historians will point to the image below and say that the end game of Keynesian central banking started here. It could not commence too soon.


While some have argued that President Obama and his folly-prone foreign policy debacle is the laughing stock of the world, it seems, as DefenseNews reports, that the Iraqi military is directly mocking America. Just a day after Defense Secretary Ash Carter accused them of cowardice, an umbrella group for mostly Shiite militia and volunteer fighters, Hashed al-Shaabi, said it had dubbed a military campaign to cut off the Islamic State group in Anbar province as "Operation Labaik ya Hussein," which roughly translates as "We are at your service, Hussein."

Defense Secretary Ash Carter offered a withering critique of the will of Iraqi defense forces in the fall of Ramadi to Islamic State.

“The Iraqi forces just showed no will to fight,” he said. “They were not outnumbered. In fact they vastly outnumbered the opposing force and yet they failed to fight and withdrew from the site...We can give them training, we can give them equipment. We obviously can’t give them the will to fight.”

For their part, the Iraqis denied Carter’s assessment - which amounted to calling Ramadi’s defenders cowards - blaming poor strategy and, ironically, inadequate air support for the defeat. But, as DefenseNews reports, the Iraqi forces had more to say...

The Pentagon expressed disappointment on Tuesday over a decision by Iraqi militias to impose an explicitly Shiite name for a military operation in Iraq's Sunni heartland, saying it could aggravate sectarian tensions.


An umbrella group for mostly Shiite militia and volunteer fighters, Hashed al-Shaabi, said it had dubbed a military campaign to cut off the Islamic State group in Anbar province as "Operation Labaik ya Hussein," which roughly translates as "We are at your service, Hussein."


The name refers to one of the most revered imams in Shiite Islam.


"I think it's unhelpful," spokesman Col. Steven Warren said.


"We've long said . . . the key to victory, the key to expelling ISIL from Iraq is a unified Iraq," Warren said, using an alternative acronym for the IS group.


That required "a unified Iraq that separates itself from sectarian divides, coalesces around this common threat and works to expel ISIL from Iraq," he said.


"The solution is a unified Iraqi government," he added.


Iraqi officials said about 4,000 fighters from the militia group were heading to the northern edge of Ramadi as a first step to eventually rolling back the IS jihadists from city, which fell to the extremists on May 17.

The Iraqi government and its American allies had been reluctant to send in Iran-backed Shiite militia in Anbar — a predominantly Sunni province. But the IS advance in Ramadi — a major blow for both Baghdad and the US-led coalition — prompted Iraq to approve the deployment of the militias.

Washington is wary of the militias with ties to Iran but has said it would support a role for all forces that remain under the authority of the Iraqi government.


"Many of them (militias in the Anbar area) are under the control of the central government," Warren said.


But he added: "I don't know whether if any that are there are not under the control of the government."

*  *  *

Of course, there is always the chance that Iraqi military are refeering to Barack Hussein Obama of course...

Submitted by John Whitehead via The Rutherford Institute,

“The ultimate goal of the NSA is total population control.”—William Binney, NSA whistleblower

We now have a fourth branch of government.

As I document in my new book Battlefield America: The War on the American People, this fourth branch came into being without any electoral mandate or constitutional referendum, and yet it possesses superpowers, above and beyond those of any other government agency save the military. It is all-knowing, all-seeing and all-powerful. It operates beyond the reach of the president, Congress and the courts, and it marches in lockstep with the corporate elite who really call the shots in Washington, DC.

You might know this branch of government as Surveillance, but I prefer “technotyranny,” a term coined by investigative journalist James Bamford to refer to an age of technological tyranny made possible by government secrets, government lies, government spies and their corporate ties.

Beware of what you say, what you read, what you write, where you go, and with whom you communicate, because it will all be recorded, stored and used against you eventually, at a time and place of the government’s choosing. Privacy, as we have known it, is dead.

The police state is about to pass off the baton to the surveillance state.

Having already transformed local police into extensions of the military, the Department of Homeland Security, the Justice Department and the FBI are preparing to turn the nation’s soldier cops into techno-warriors, complete with iris scanners, body scanners, thermal imaging Doppler radar devices, facial recognition programs, license plate readers, cell phone Stingray devices and so much more.

This is about to be the new face of policing in America.

The National Security Agency (NSA) has been a perfect red herring, distracting us from the government’s broader, technology-driven campaign to render us helpless in the face of its prying eyes. In fact, long before the NSA became the agency we loved to hate, the Justice Department, the FBI, and the Drug Enforcement Administration were carrying out their own secret mass surveillance on an unsuspecting populace.

Just about every branch of the government—from the Postal Service to the Treasury Department and every agency in between—now has its own surveillance sector, authorized to spy on the American people. Then there are the fusion and counterterrorism centers that gather all of the data from the smaller government spies—the police, public health officials, transportation, etc.—and make it accessible for all those in power. And of course that doesn’t even begin to touch on the complicity of the corporate sector, which buys and sells us from cradle to grave, until we have no more data left to mine.

The raging debate over the fate of the NSA’s blatantly unconstitutional, illegal and ongoing domestic surveillance programs is just so much noise, what Shakespeare referred to as “sound and fury, signifying nothing.”

It means nothing: the legislation, the revelations, the task forces, and the filibusters.

The government is not giving up, nor is it giving in. It has stopped listening to us. It has long since ceased to take orders from “we the people.”

If you haven’t figured it out yet, none of it—the military drills, the surveillance, the militarized police, the strip searches, the random pat downs, the stop-and-frisks, even the police-worn body cameras—is about fighting terrorism. It’s about controlling the populace.

Despite the fact that its data snooping has been shown to be ineffective at detecting, let alone stopping, any actual terror attacks, the NSA continues to operate largely in secret, carrying out warrantless mass surveillance on hundreds of millions of Americans’ phone calls, emails, text messages and the like, beyond the scrutiny of most of Congress and the taxpayers who are forced to fund its multi-billion dollar secret black ops budget.

Legislation such as the USA Patriot Act serves only to legitimize the actions of a secret agency run by a shadow government. Even the proposed and ultimately defeated USA Freedom Act, which purported to restrict the reach of the NSA’s phone surveillance program—at least on paper—by requiring the agency to secure a warrant before surveillance could be carried out on American citizens and prohibiting the agency from storing any data collected on Americans, amounted to little more than a paper tiger: threatening in appearance, but lacking any real bite.

The question of how to deal with the NSA—an agency that operates outside of the system of checks and balances established by the Constitution—is a divisive issue that polarizes even those who have opposed the NSA’s warrantless surveillance from the get-go, forcing all of us—cynics, idealists, politicians and realists alike—to grapple with a deeply unsatisfactory and dubious political “solution” to a problem that operates beyond the reach of voters and politicians: how do you trust a government that lies, cheats, steals, sidesteps the law, and then absolves itself of wrongdoing to actually obey the law?

Since its official start in 1952, when President Harry S. Truman issued a secret executive order establishing the NSA as the hub of the government’s foreign intelligence activities, the agency—nicknamed “No Such Agency”—has operated covertly, unaccountable to Congress all the while using taxpayer dollars to fund its secret operations. It was only when the agency ballooned to 90,000 employees in 1969, making it the largest intelligence agency in the world with a significant footprint outside Washington, DC, that it became more difficult to deny its existence.

In the aftermath of Watergate in 1975, the Senate held meetings under the Church Committee in order to determine exactly what sorts of illicit activities the American intelligence apparatus was engaged in under the direction of President Nixon, and how future violations of the law could be stopped. It was the first time the NSA was exposed to public scrutiny since its creation.

The investigation revealed a sophisticated operation whose surveillance programs paid little heed to such things as the Constitution. For instance, under Project SHAMROCK, the NSA spied on telegrams to and from the U.S., as well as the correspondence of American citizens. Moreover, as the Saturday Evening Post reports, “Under Project MINARET, the NSA monitored the communications of civil rights leaders and opponents of the Vietnam War, including targets such as Martin Luther King, Jr., Mohammed Ali, Jane Fonda, and two active U.S. Senators. The NSA had launched this program in 1967 to monitor suspected terrorists and drug traffickers, but successive presidents used it to track all manner of political dissidents.”

Senator Frank Church (D-Ida.), who served as the chairman of the Select Committee on Intelligence that investigated the NSA, understood only too well the dangers inherent in allowing the government to overstep its authority in the name of national security. Church recognized that such surveillance powers “at any time could be turned around on the American people, and no American would have any privacy left, such is the capability to monitor everything: telephone conversations, telegrams, it doesn’t matter. There would be no place to hide.”

Noting that the NSA could enable a dictator “to impose total tyranny” upon an utterly defenseless American public, Church declared that he did not “want to see this country ever go across the bridge” of constitutional protection, congressional oversight and popular demand for privacy. He avowed that “we,” implicating both Congress and its constituency in this duty, “must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision, so that we never cross over that abyss. That is the abyss from which there is no return.”

The result was the passage of the Foreign Intelligence Surveillance Act (FISA), and the creation of the FISA Court, which was supposed to oversee and correct how intelligence information is collected and collated. The law requires that the NSA get clearance from the FISA Court, a secret surveillance court, before it can carry out surveillance on American citizens. Fast forward to the present day, and the so-called solution to the problem of government entities engaging in unjustified and illegal surveillance—the FISA Court—has unwittingly become the enabler of such activities, rubberstamping almost every warrant request submitted to it.

The 9/11 attacks served as a watershed moment in our nation’s history, ushering in an era in which immoral and/or illegal government activities such as surveillance, torture, strip searches, SWAT team raids are sanctioned as part of the quest to keep us “safe.”

In the wake of the 9/11 attacks, George W. Bush secretly authorized the NSA to conduct warrantless surveillance on Americans’ phone calls and emails. That wireless wiretap program was reportedly ended in 2007 after the New York Times reported on it, to mass indignation.

Nothing changed under Barack Obama. In fact, the violations worsened, with the NSA authorized to secretly collect internet and telephone data on millions of Americans, as well as on foreign governments.

It was only after whistleblower Edward Snowden’s revelations in 2013 that the American people fully understood the extent to which they had been betrayed once again.

What this brief history of the NSA makes clear is that you cannot reform the NSA.

As long as the government is allowed to make a mockery of the law—be it the Constitution, the FISA Act or any other law intended to limit its reach and curtail its activities—and is permitted to operate behind closed doors, relaying on secret courts, secret budgets and secret interpretations of the laws of the land, there will be no reform.

Presidents, politicians, and court rulings have come and gone over the course of the NSA’s 60-year history, but none of them have done much to put an end to the NSA’s “technotyranny.”

The beast has outgrown its chains. It will not be restrained.

The growing tension seen and felt throughout the country is a tension between those who wield power on behalf of the government—the president, Congress, the courts, the military, the militarized police, the technocrats, the faceless unelected bureaucrats who blindly obey and carry out government directives, no matter how immoral or unjust, and the corporations—and those among the populace who are finally waking up to the mounting injustices, seething corruption and endless tyrannies that are transforming our country into a technocrized police state.

At every turn, we have been handicapped in our quest for transparency, accountability and a representative democracy by an establishment culture of secrecy: secret agencies, secret experiments, secret military bases, secret surveillance, secret budgets, and secret court rulings, all of which exist beyond our reach, operate outside our knowledge, and do not answer to “we the people.”

What we have failed to truly comprehend is that the NSA is merely one small part of a shadowy permanent government comprised of unelected bureaucrats who march in lockstep with profit-driven corporations that actually runs Washington, DC, and works to keep us under surveillance and, thus, under control. For example, Google openly works with the NSA, Amazon has built a massive $600 million intelligence database for the CIA, and the telecommunications industry is making a fat profit by spying on us for the government.

In other words, Corporate America is making a hefty profit by aiding and abetting the government in its domestic surveillance efforts. Conveniently, as the Intercept recently revealed, many of the NSA’s loudest defenders have financial ties to NSA contractors.

Thus, if this secret regime not only exists but thrives, it is because we have allowed it through our ignorance, apathy and naïve trust in politicians who take their orders from Corporate America rather than the Constitution.

If this shadow government persists, it is because we have yet to get outraged enough to push back against its power grabs and put an end to its high-handed tactics.

And if this unelected bureaucracy succeeds in trampling underfoot our last vestiges of privacy and freedom, it will be because we let ourselves be fooled into believing that politics matters, that voting makes a difference, that politicians actually represent the citizenry, that the courts care about justice, and that everything that is being done is in our best interests.

Indeed, as political scientist Michael J. Glennon warns, you can vote all you want, but the people you elect aren’t actually the ones calling the shots. “The American people are deluded … that the institutions that provide the public face actually set American national security policy,” stated Glennon. “They believe that when they vote for a president or member of Congress or succeed in bringing a case before the courts, that policy is going to change. But … policy by and large in the national security realm is made by the concealed institutions.”

In other words, it doesn’t matter who occupies the White House: the secret government with its secret agencies, secret budgets and secret programs won’t change. It will simply continue to operate in secret until some whistleblower comes along to momentarily pull back the curtain and we dutifully—and fleetingly—play the part of the outraged public, demanding accountability and rattling our cages, all the while bringing about little real reform.

Thus, the lesson of the NSA and its vast network of domestic spy partners is simply this: once you allow the government to start breaking the law, no matter how seemingly justifiable the reason, you relinquish the contract between you and the government which establishes that the government works for and obeys you, the citizen—the employer—the master.

Once the government starts operating outside the law, answerable to no one but itself, there’s no way to rein it back in, short of revolution. And by revolution, I mean doing away with the entire structure, because the corruption and lawlessness have become that pervasive.

While there is much debate whether the latest and greatest Apple fad is a dud...

or a hit...

Son of Wang Jianlin, China's richest man and chairman of Dalian Wanda, buys his dog two gold Apple Watches $AAPL

— Haidi Lun ??? (@HaidiLun) May 27, 2015

... Apple has, in case the fading wearables mania is the former, a Plan C: a self-driving car

Or maybe not, because for a company built on the successful creation, execution and marketing of gadgets with a two year average lifespan, the worst thing that can happen is for the world to glimpse the unpleasant reality behind the glitzy, futuristic facade for sale every day (usually with a 4-6 weeks delivery delay) in Cupertino.

Such as this video, taken in the Dominican Republic, showing a self-parking Volvo XC60 reversing itself, waiting, and then slamming into journalists who were gawking at the "fascinating" if somewhat homicidal creation, at full speed.

As the Independent reports, the horrifying pictures went viral and were presumed to have resulted from a malfunction with the car.

Only it wasn't a malfunction.

Instead, in what is perhaps the most epic "option" in the history of automotive history, Volvo decided to make the special feature known as “pedestrian detection functionality” cost extra money.

It gets better: the cars do have auto-braking features as standard, but only for avoiding other cars — if they are to avoid crashing into pedestrians, too, then owners must pay extra.

“It appears as if the car in this video is not equipped with Pedestrian detection,” Volvo spokesperson Johan Larsson told Fusion. “This is sold as a separate package.”


The feature uses a radar and camera to see pedestrians.


“The pedestrian detection would likely have been inactivated due to the driver inactivating it by intentionally and actively accelerating,” Larsson said. “Hence, the auto braking function is overrided by the driver and deactivated.”


The blog that uploaded the video said that the two men “were bruised but are ok”. They said that “sources” had told them that “the drivers forgot to turn on ‘City-Safe’ mode”.

Indeed: a "self-driving" parking car which conveniently has an optional extra that stops the car from smashing into people.

In other words, unless you can fork over the extra couple thousand bucks, the future "self-driving" car becomes a war truck right out of Mad Max, filled with an insatiable desire to mangle and crush any carbon-based life forms that have the misfortune of crossing its path.

Just like in the video below. Presenting: the future.

A little over a month ago, China witnessed its first default by a state-owned enterprise when Baoding Tianwei Group, a subsidiary of state-run China South Industries Group, defaulted on a $14 million coupon payment. That event raised two important issues. First, it suggested that Beijing will not necessarily step in to rescue state-affiliated companies who find themselves in financial trouble and second, it underscored the degree to which China’s $14 trillion corporate debt pile presents a very real risk especially considering the rapidly increasing number of non-performing loans on the books of the country’s banking sector.

Today, we get still more evidence that China may be headed for a debt disaster as a third company has now defaulted on its onshore bonds. 

This time it’s soft drink bottle maker Zhuhai Zhongfu Enterprise Co which, as Bloomberg reports, will come up nearly 450 million yuan short when a principal payment for paper issued in 2012 comes due on Thursday. Here’s more:

Zhuhai Zhongfu Enterprise Co., which supplies bottles for Coca-Cola Co. and PepsiCo Inc. in China, can only repay 148 million yuan ($23.9 million) of the 590 million yuan principal, according to a statement to the Shenzhen Stock Exchange Monday. It plans to pay all the 31.152 million yuan of interest. The manufacturer, which isn’t state-owned, sold the 5.28 percent securities in 2012…


Han Huiming, board secretary at Zhuhai Zhongfu, said when reached by phone Tuesday that the company will try to raise funds for the bond payment until the last moment.


The manufacturer, which is based in the southern city of Zhuhai and employees about 4,000 people, said in a May 21 statement that a bank consortium rejected its application for 500 million yuan of loans in May. 


The Zhuhai branches of China Everbright Bank Co. and Bank of China Ltd. have limited its freedom to spend the 61 million yuan of capital on its accounts, it said.


Because Zhuhai Zhongfu is having a “liquidity crisis,” the company can’t collect enough money for the payment through its own business operations, according to the statement Monday.


Zhuhai Zhongfu’s orders have declined significantly since 2012 as its biggest clients increased their own production of bottles, according to a report from China International Capital Corp. on May 11. The company’s business with its three largest clients Coca-Cola, PepsiCo and Uni-President China Holdings Ltd. generated only 33 percent of revenue last year, down from 49 percent in 2011, according to CICC. Coca-Cola remains the manufacturer’s biggest customer, according to board secretary Han.


The shift comes as Coca-Cola and PepsiCo are increasingly focusing on cost-cutting to help support operating margins amid waning soft-drink demand, according to Bloomberg Intelligence.

All of the above notwithstanding, the company’s Shenzhen-listed shares had risen more than 120% YTD before they were halted last month with equity ‘investors’ completely ignoring the fundamental story as they have with virtually everything else that changes hands on the exchange which is now trading at a mind-bending 71 times earnings after at least 250 individual names traded limit-up on Tuesday.

Indeed, you didn’t even have to look at an income statement to know how risky of a bet this was because the debt was yielding near 20% before it was delisted last year.

The company’s notes yielded 19.33 percent in the secondary market on June 27 last year before being delisted from the exchange, according to exchange data.

Still, investors remain confident that Beijing, despite rhetoric to the contrary, will be loath to allow onshore defaults as $17 billion in principal payments come due in 2015, a figure that is set to rise exponentially over the next six years. Here's Bloomberg again:

The People’s Bank of China may coordinate loan support for Baoding Tianwei Group Co. after it became the first state-owned entity to default on a coupon payment in April, OCBC said, citing local media. Restaurant-turned-Internet firm Cloud Live Technology was the first onshore issuer to miss a principal payment in April and has raised funds from “unclear” sources to partly repay noteholders, OCBC said.


Zhuhai Zhongfu, based in the southern city of Zhuhai, is still short 442 million yuan for a bond payment due Thursday, the company said in a statement to the Shenzhen stock exchange Monday. It will try to raise more money by May 26, it said.


Narrowing spreads on onshore bonds suggest investors are still counting on state guarantees, said OCBC, which compared Baoding’s situation with bailouts last year for Shanghai Chaori Solar Energy Science & Technology Co. and a trust product known as China Credit Equals Gold No. 1. The difference between AAA and BBB+ rated yields has fallen to 933 basis points from 942 at the start of the year, while the gap between AAA and AA notes shrank to 114 from 129, according to the report.


Chinese companies must repay an equivalent $16.9 billion of maturing onshore notes in 2015, Koh estimated in the report. That increases every year and will peak at $192.3 billion in 2021. Some 65 percent of institutions expect at least one more onshore default this quarter, according to a Bloomberg survey of 20 banks, brokerages and money managers published on May 18.

Clearly, this is a rather large problem, but as we outlined in "How China's Banks Hide Trillions In Credit Risk," the government will often force banks to roll over maturing debt in order to paper over (literally) what is almost certainly a deteriorating situation and in fact, the PBoC recently did a complete 180 on regulations around local government financing via LGFVs in an effort to jumpstart the shadow banking credit creation machine, a move which Fitch calls "an explicit form of regulatory forbearance." 

Whatever the case, it's becoming increasingly clear that the combination of slumping economic growth and $28 trillion in debt has the potential to trigger a wave of defaults from both state-run and private borrowers, a state of affairs which will test Beijing's resolve when it comes to projecting stability in the country's credit markets.

With the US spiraling quickly towards a maritime conflict with China over the latter’s “construction projects” in the disputed South China Sea and with NATO doing its best to match Moscow’s Eastern European sabre-rattling on the way to facilitating the most serious confrontation between Russia and the West in decades, we thought it as good a time as any to bring you the following graphic which shows the percentage of your life that the US has been at war.

Simply put, if you were born before in 1992 or later, America has been at war for at least two-thirds of your life and if you were born after 2001, well... you have never known life in the US without war.

More from The Washington Post:
Using somewhat subjective definitions of "at war" -- Korea counts but Kosovo doesn't in our analysis, for example -- we endeavored to figure out how much of each person's life has been spent with America at war. We used whole years for both the age and the war, so the brief Gulf War is given a full year, and World War II includes 1941. These are estimates.
But the beginning of the conflict in Afghanistan in (late) 2001 means that anyone born in the past 13 years has never known an America that isn't at war. Anyone born after 1984 has likely seen America at war for at least half of his or her life. And that's a lot of Americans.
Given recent events in Iraq and Syria, this isn't likely to change anytime soon.

Submitted by Jeffrey Snider via Alhambra Investment Partners,

A little over two years ago, in the middle of April 2013, there was a gold crash that came seemingly out of nowhere. Worse, for gold investors anyway, that crash was repeated just a few months later. Where gold had stood just shy of $1,800 an ounce at the start of QE3, those cascades had brought the metal price down to just $1,200. For many, especially 'so-called' orthodox economists, it heralded the end of the “fear trade” and meant, unambiguously, that the recovery had finally at long last arrived.

As Felix Salmon wrote at Reuters in an article titled, The Fear Bubble Bursts:

As a result, the falling price of gold is more important than simply being an opportunity for schadenfreude around the likes of Glenn Beck or John Paulson or Zero Hedge…


The biggest problem in the markets right now is that they’re still far too risk-averse. Fear-based assets like gold, Treasury bonds, and cash are in high demand, while there isn’t enough money flowing through greed-based assets like stocks and bank loans and into the economy as a whole. Even if the stock market is expensive, the number of primary and secondary offerings remains low; similarly, banks are not expanding their loan books nearly fast enough…


My hope is that the price of gold will continue to fall, that goldbugs will look increasingly silly, and that as a result Americans with savings will conclude that the best thing to do with those savings is to put them to work in a productive manner, rather than self-defeatingly trying to protect what they have.

Gold has not continued that wished-for collapse, but hasn’t risen much either. In fact, the price of gold remained above $1,300 for only short periods and hasn’t been near that level outside of the January 2015 “Swiss problem.” Most gold analysis views it in terms of not just the “fear bubble” but also a proxy for interest rates and monetary policy. There is already a problem with that latter interpretation, as the price of gold began to its decline almost the moment QE3 started. Economists think of gold investors in only these terms, as emotional and irrational Fed-haters.

ABOOK May 2015 Gold Dollar

In the broader economic context, then, the fact that gold was falling at the same time QE’s had commenced provided that hoped-for economic confirmation. Gold adherents were getting their “debasement” but that gold prices were sharply reacting in the “wrong” direction which could only mean, to the mainline economic view, that QE wasn’t just debasing the dollar it was actually working while doing so.

Writing just prior to the second gold “slam” in June 2013, Nouriel Roubini took his best shots at framing gold’s descent as a victory for Ben Bernanke:

Third, unlike other assets, gold does not provide any income. Whereas equities have dividends, bonds have coupons, and homes provide rents, gold is solely a play on capital appreciation. Now that the global economy is recovering, other assets—equities or even revived real estate—thus provide higher returns. Indeed, U.S. and global equities have vastly outperformed gold since the sharp rise in gold prices in early 2009.


Fourth, gold prices rose sharply when real (inflation-adjusted) interest rates became increasingly negative after successive rounds of quantitative easing. The time to buy gold is when the real returns on cash and bonds are negative and falling. But the more positive outlook about the U.S. and the global economy implies that over time the Federal Reserve and other central banks will exit from quantitative easing and zero policy rates, which means that real rates will rise, rather than fall. [emphasis added]

Roubini’s fourth point may be the most important, as it implies that there is a relationship between the Fed’s policies, especially QE’s, and the rate of inflation. However, recent history, especially in the two years since gold crashed, has proven that totally and fully incorrect. There has been no “inflation” much at all, and even to the point that the Fed’s preferred inflation target, the PCE deflator, has come in under the policy target of 2% for 35 straight months dating back to just before QE3 was rumored.

ABOOK May 2015 Gold PCE Deflator

If QE3 and QE4 had any impact on “inflation” or recovery in the US it is not apparent. For a time in 2013, Roubini’s “rising real rate” scenario seemed to be somewhat plausible as the entire UST complex and yield curve shifted upward. While the PCE deflator did not much move, that temporary rise in nominal yields brought real rates up and appeared at first as if it might reflect at least the near-future possibility of the recovery and recovery financial dynamics.

But that all turned around in October and November 2013. In other words, anything resembling the recovery in these financial terms had a very short life. By November 2013, nominal yields had slowed their ascent and the overall UST yield curve turned durably bearish. Though real rates fell once more in the middle of 2014 as “inflation” ticked up slightly, since October 2014 “inflation” has declined far faster than nominal yields. So real interest rates have been rising, but not for the reasons outlined by Roubini and his orthodox notions of recovery.

ABOOK May 2015 Gold PCE Deflator Real Rates

Clearly, there is “something” missing here beyond just the recovery economists were so sure that gold’s crash was foretelling. Normalizing both economic and financial conditions would mean interest rates rising back toward where they were pre-crisis just as “inflation” picks up and remains at or slightly above 2%. Neither of those factors is evident anywhere at all in the two years since gold prices crashed.

The idea of gold prices behaving like a zero-coupon bond is in some ways relevant to this problem. Economists only think of the asset side of that paradigm while never moving beyond that into liabilities. A government bond is an asset, sure enough, but it can also be part of the liability structure in repo. Just as government bonds act as collateral, so too does gold. That has led to strict and lasting misinterpretation about the behavior of gold in 2008, which Roubini tried to incorporate within his anti-gold stance.

But, even in that dire scenario, gold might be a poor investment. Indeed, at the peak of the global financial crisis in 2008 and 2009, gold prices fell sharply a few times. In an extreme credit crunch, leveraged purchases of gold cause forced sales, because any price correction triggers margin calls.

That isn’t what happened to gold, at all. You can disprove that theory rather easily, as I wrote contemporarily in April 2013 about the gold slam as it was occurring.

ABOOK May 2015 Gold 2008

Gold prices crashed on three separate occasions in 2008, all of which were tied to problems in collateral chains and interbank financial irregularities. In the first episode, the price decline started when Bear Stearns failed and ended on May 2, 2008. That date stands out because that was the first time the Fed had expanded its list of acceptable and eligible collateral in its TSLF Schedule 2 to include non-GSE MBS paper as well as strictly non-mortgage ABS. In other words, the collateral implosion started by Bear Stearns “cold fusion” ended the moment the Fed debased not the currency or bank reserves but the list of “appropriate” interbank collateral.

As I described it in April 2013:

That means in times of extreme stress, gold acts like a universal liquidity stopgap – when all else fails, repo gold. The operational reality of a gold repo is a gold lease, charged at the forward rate (GOFO). In terms of market mechanics, a dramatic increase in gold leasing is seen as a massive increase in supply on the paper markets.


For various reasons in the past five years, collateral chains and the available collateral pool has dwindled dramatically. That has left banks to scramble for operational bypasses, but it also has led to periods of very acute stress. [emphasis in original]

As a representation of the “dollar”, then, gold prices act as a partial proxy of actual “dollar” availability balanced against that or any desperate bid for safety – and having very little to do with interest rate differentials.

That makes the trend in gold since QE3 started all the more interesting if we take in the “correct” context of the global “dollar.” Clearly, we cannot take falling gold as indicating a recovery because one never came and it surely looks to be further away now than then, an interpretation consistent with financial measures, yields and prices. But we can look at gold over the past three years since QE3 and link its behavior to that of the “dollar.”

While economists might still see QE as contributing to global “liquidity”, which it seems like it should what with all those trillions in bank “reserves” created, there has been persistent criticism of it as nurturing instead the opposite condition. The major part of creating all those bank “reserves” is to remove collateral in the process – transforming a repo-based system back toward a more-traditional idea of how banking used to work. But the wholesale system since August 2007 has been moving away from unsecured lending interbank and otherwise to almost purely repo.

The Fed has been very aware of this problem especially when it nearly destroyed repo in April 2011 (and then a desperate “dollar” problem only two months later?) by stripping the system of almost all t-bills toward the end of QE2 (which was the reason for Operation Twist). When planning and extrapolating for QE3, those operational constraints were at best secondary to the psychological effects that were supposed to accompany Bernanke’s massive and “open ended” monetary program. Getting everyone to “feel” better that the Fed was doing something big was meant as a far greater economic stimulant than the negative liquidity of depriving usable collateral in terrible quantities. The recovery from the defeat of pessimism, in Felix Salmon’s terms, was thought to be so much more powerful than the status of actual “dollar” circulation ability.

ABOOK May 2015 TIC 6mo Eurodollar

So much happy emotion was never really much of a “stimulant”, of course, but the negative factors on “dollar” circulation were very real. In many ways, the collapse in gold presaged this latest stage or leg in the collapse of the global “dollar”, eurodollars in particular, which starts to account for the economic behavior these past few years as well. Gold, then, since early 2008 has been telling us a lot about the tendency of the eurodollar standard toward outright imbalance and dysfunction. That is a condition that is not in any way conducive for a global recovery, which is one big reason why, despite orthodox giddiness over gold prices, it never came.

It also suggests that QE has acted as a depressant upon the global economy, net, depriving significant circulation ability in eurodollar channels and beyond. This would include not just reduced levels of collateral flow, but also bank balance sheet capacity overall in the full 2013 aftermath of QE3 and QE4. It would have been nice if gold’s price collapse was a signal of actual success, but instead it appears to be just another form of structural financial decay and the economic malaise (at best) that attends it. In that view, it is somewhat amazing that gold prices haven’t suffered further lower lows, which suggests that there may actually have been a significant safety bid all along. The “fear” bubble did not end; it was overwhelmed by QE’s depressive constant and the related countdown to the end of the eurodollar standard.

ABOOK May 2015 Gold Repo Fails


Gold price activity since QE3 has been a warning, and a big one, not cause for victory celebrations.

Late last month we outlined an IBTimes report which showed that Goldman Sachs paid nearly a quarter of a million dollars to Bill Clinton for a speech before lobbying the State Department (then run by Hillary Clinton) on legislation tied to the Export-Import Bank which would eventually approved a loan to a Chinese company that subsequently placed a $75 million purchase order with a Goldman-owned aircraft manufacturer. The implication, of course, was that the speaking engagement fee ultimately influenced the State Department’s decision making, a suggestion Goldman called “preposterous.” 

The Clintons have also come under scrutiny for possible conflicts of interest arising from contributions to Clinton Foundation charities while Hillary Clinton served as the nation’s top diplomat. More specifically, a Reuters investigation revealed that the Foundation failed to report “tens of millions” of donations from foreign governments on three years’ worth of 990s, prompting the organization’s acting CEO Maura Pally to pen a lengthy blog post explaining the “mistake.” Shortly thereafter, Reuters found inaccuracies in Pally’s explanation, noting that in fact, Clinton broke transparency promises made to the Obama administration. 

Now, the IBTimes is out with a new investigative piece that looks at the relationship between foreign government and corporate donors to Clinton charities and weapons deals negotiated under Hillary Clinton’s State Department which, as it turns out, approved $165 billion in arms deals to nations who had previously given money to the Clinton Foundation. 

Via IBTimes:

In the years before Hillary Clinton became secretary of state, the Kingdom of Saudi Arabia contributed at least $10 million to the Clinton Foundation, the philanthropic enterprise she has overseen with her husband, former president Bill Clinton. Just two months before the deal was finalized, Boeing -- the defense contractor that manufactures one of the fighter jets the Saudis were especially keen to acquire, the F-15 -- contributed $900,000 to the Clinton Foundation, according to a company press release.


The Saudi deal was one of dozens of arms sales approved by Hillary Clinton’s State Department that placed weapons in the hands of governments that had also donated money to the Clinton family philanthropic empire, an International Business Times investigation has found.


Under Clinton's leadership, the State Department approved $165 billion worth of commercial arms sales to 20 nations whose governments have given money to the Clinton Foundation, according to an IBTimes analysis of State Department and foundation data. That figure -- derived from the three full fiscal years of Clinton’s term as Secretary of State (from October 2010 to September 2012) -- represented nearly double the value of American arms sales made to the those countries and approved by the State Department during the same period of President George W. Bush’s second term…


The Clinton-led State Department also authorized $151 billion of separate Pentagon-brokered deals for 16 of the countries that donated to the Clinton Foundation, resulting in a 143 percent increase in completed sales to those nations over the same time frame during the Bush administration. These extra sales were part of a broad increase in American military exports that accompanied Obama’s arrival in the White House.

These deals benefited the usual Middle East suspects with whom the Obama administration is now coordinating for the ouster of Assad...

The State Department formally approved these arms sales even as many of the deals enhanced the military power of countries ruled by authoritarian regimes whose human rights abuses had been criticized by the department. Algeria, Saudi Arabia, Kuwait, the United Arab Emirates, Oman and Qatar all donated to the Clinton Foundation and also gained State Department clearance to buy caches of American-made weapons even as the department singled them out for a range of alleged ills, from corruption to restrictions on civil liberties to violent crackdowns against political opponents.  

...and were consummated even as Clinton herself acknowledged an explicit link between some beneficiaries and funding for the very same terrorists who are now set to become a scapegoat for the very same Assad ouster…

As secretary of state, Hillary Clinton also accused some of these countries of failing to marshal a serious and sustained campaign to confront terrorism. In a December 2009 State Department cable published by Wikileaks, Clinton complained of “an ongoing challenge to persuade Saudi officials to treat terrorist financing emanating from Saudi Arabia as a strategic priority.” She declared that “Qatar's overall level of CT cooperation with the U.S. is considered the worst in the region.” 

... and in case there was any doubt about Clinton's ability to influence weapons sales to foreign governments…

Questions about the nexus of arms sales and Clinton Foundation donors stem from the State Department’s role in reviewing the export of American-made weapons. The agency is charged with both licensing direct commercial sales by U.S. defense contractors to foreign governments and alsoapproving Pentagon-brokered sales to those governments. Those powers are enshrined in a federal law that specifically designates the secretary of state as “responsible for the continuous supervision and general direction of sales” of arms, military hardware and services to foreign countries. In that role, Hillary Clinton was empowered to approve or reject deals for a broad range of reasons, from national security considerations to human rights concerns.

The report doesn’t stop there. There are also links between the Clintons and the military-industrial complex with the likes of Boeing, Lockheed Martin, and United Technologies all donating money to the Foundation before being listed as contractors on more than 100 arms deals. 

That group of arms manufacturers -- along with Clinton Foundation donors Boeing, Honeywell, Hawker Beechcraft and their affiliates -- were together listed as contractors in 114 such deals while Clinton was secretary of state...


Boeing was one of three companies that helped deliver money personally to Bill Clinton while benefiting from weapons authorizations issued by Hillary Clinton’s State Department. The others were Lockheed and the financial giant Goldman Sachs.

In the end, this serves as further evidence that the person who is viewed, at least for the time being, as the likely next US Commander in Chief, has in the past been susceptible to the influence of foreign governments whose cash contributions to Clinton charities may have served to shape US weapons deals with Washington's Middle Eastern allies. We'll close with the following from Harvard professor Stephen Walt:

American foreign policy is better served if people responsible for it are not even remotely suspected of having these conflicts of interest.

We wish you the best of luck with that Mr. Walt.

We’ve previously noted that the powers-that-be have been planning for MANY DECADES to break up Iraq into several countries.

And the same has been true for Syria.

One of the key architects of the Iraq war – John Bolton – previously said that the Iraq war was about oil, not protecting the United States from weapons of mass destruction. And see this.

Last weekend, Bolton said:

The Arabs divided between Sunnis and Shias – I think the Sunni Arabs are never going to agree to be in a state where the Shia outnumber them 3-1. That’s what ISIS has been able to take advantage of.


I think our objective should be a new Sunni state out of the western part of Iraq, the eastern part of Syria run by moderates or at least authoritarians who are not radical Islamists. What’s left of the state of Iraq, as of right now, is simply a satellite of the ayatollahs in Tehran. It’s not anything we should try to aid.

In other words, one of the key architects of the Iraq war has openly called for partition of Iraq and Syria into a number of different countries … as the Neocons have been planning for over 20 years.

Postscript: The hawks are not exactly sad about the rise of ISIS.

"I got interested in her in 2008," Kenyan Felix Kiprono tells The Nairobian newspaper, and now, in an official marriage request, the lawyer has offered US president Barack Obama 50 cows, 70 sheep, and 30 goats in exchange for his 16-year old daughter Malia's hand in marriage. As AFP reports, Kiprono dismissed the notion he might be a gold-digger, adding that he and the young Obama would lead "a simple life," and he will teach Malia how to milk a cow. This is not the first time a Kenyan has offered livestock in exchange for a President's daughter...


A Kenyan lawyer has offered US president Barack Obama 50 cows and other assorted livestock in exchange for his 16-year old daughter Malia's hand in marriage, a report said Tuesday. As AFP reports,

Felix Kiprono said he was willing to pay 50 cows, 70 sheep and 30 goats in order to fulfil his dream of marrying the first daughter.


"I got interested in her in 2008," Kiprono said, in an interview with The Nairobian newspaper.


At that time President Obama was running for office for the first time and Malia was a 10-year-old.


"As a matter of fact, I haven't dated anyone since and promise to be faithful to her. I have shared this with my family and they are willing to help me raise the bride price," he said.


Kiprono said he intended to put his offer of marriage to Obama and hopes the president will bring his daughter with him when he makes his first presidential visit to Kenya, the country where his father was born, in July.


Obama's Kenyan grandmother, who is in her early 90s, still lives in Kogelo, in western Kenya, home to a number of the president's relatives.


"I am currently drafting a letter to Obama asking him to please have Malia accompany him for this trip. I hope the embassy will pass the letter to him," he said.

Kiprono dismissed the notion he might be a gold-digger.

"People might say I am after the family's money, which is not the case. My love is real," he insisted.


The young lawyer, whose age was not revealed, said he had already planned his proposal, which would be made on a hill near his rural village, and the wedding at which champagne would be shunned in favour of a traditional sour milk called "mursik".


Kiprono said that as a couple he and the young Obama would lead "a simple life".


"I will teach Malia how to milk a cow, cook ugali (maize porridge) and prepare mursik like any other Kalenjin woman," he said.

And while the gesture seems very generous, we would note that this is not the first time a Kenyan has offered livestock in exchange for a President's daughter. In 2009, as CNN reports, Kenyan Godwin Kipkemoi Chepkurgor offered 40 goats and 20 cows for Chelsea Clinton's love...

The Kenyan man first offered the dowry nine years ago to then-President Bill Clinton in asking for the hand of his only child. He renewed it Thursday after Secretary of State Hillary Clinton was asked about the proposal at a Nairobi town hall session.

CNN's Fareed Zakaria, the session's moderator, commented that given the economic crisis at hand, Chepkurgor's dowry was "not a bad offer."

However, Clinton said her daughter was her own person.

"She's very independent," she said. "So I will convey this very kind offer."

*  *  *
So what have we learned: Malia Obama is worth dramatically more than Chelsea Clinton (even adjusting for inflation).


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