The one headline we have been waiting for for over four years has just hit:

• BOK KIM SAYS WORLD MAY FACE RATE RISK IF U.S. EXITS FROM QE

Not when, if. And there you have it: if the Fed exits, the world (and most certainly Japan) gets it. Thus, for the sake of the children (who will have inhert about $100 trillion in debt but don’t worry: debt is an asset as some “analysts” will promise) Bernanke can never exit. QE…D

And since never is a litte longer than 2016/2017, at some point in the next few years Bernanke will be the proud owner of all marketable Treasury paper. All of it.

By definition, exports from country A have to equal imports from country B. Unless country A is China. Then, central planning magic happens, as can be seen in the chart below showing the misreporting of Chinese exports to HK compared to HK’s reported imports from China, which is just the latest nail in the coffin of Chinese economic data “integrity.”

The issue, however, is that since China manipulates its data “upward”, as does the rest of the civilized, “unmanipulating” world, none of the ‘very serious people‘ have any incentive in calling China out – because suddenly all the world’s growth data may fall under the microscope, as perhaps it should – after all it was less than two years ago that we observed that the entire world was exporting over $300 billion more than it was importing (numbers which should net to zero), leading us to wonder if it was aliens that were importing all the excess Louis Vuitton bags…

So for those actually interested, here is Sean Corrigan of Diapason breaking down the true numbers behind China’s economy, who using real export and import data ex-manipulation and fudging, that China’s reported 7.7% GDP would translate into a 5.5% Q1 GDP growth, the lowest rate of growth in 20 years!

From Diapason Securities:

Official number for China’s 2-way trade flow growth in QI was + 13.4% yoy and for the first 4 months up 14% yoy. >> Read More

ONeill GS Summit

Over the years, Jim O’Neill, former Chairman of GSAM, rose to fame for pegging the BRIC acronym (no such luck for the guy who came up with the far more applicable and accurate PIIGS, orSTUPIDS, monikers, but that’s neither here nor there). O’Neill was correct in suggesting, about a decade ago, that the rise of the middle class in these countries and their purchasing power would prove to be a major driving force in the world economy.

O’Neill was wrong in his conclusion as to what the ultimate driver of said purchasing power would be: as it has become all too clear with the entire world drowning in debt (and recently China), it was simply debt, which moved from the funding developed world consumption to handing out credit cards to consumers in the developing world. >> Read More

That the IMF is the most unwavering optimist despite fundamentals, facts and reality has been well-documented over the years. For those who still haven’t seen the agency’s perpetual upward bias in forecasting world growth, a quick scan of the charts below will cement the understanding that all the Washington-based serial bail-outer of insolvent countries is, is a dispenser of optimism and whose agenda is simply to preserve confidence that all is still well. The charts show how just over the past year’s six outlook revisions, the IMF has been forced to downgrade, with quarterly precision, its overly optimistic forecast for virtually every part of the world, from the US, to the Euroarea, to China, and of course, the entire world: the black line is the most recent revision set – it also happens to be the lowest one.

US: expect the US 2014 forecast growth to tumble in the next several revisions – it only took 12 months for the IMF’s 2013 US GDP growth forecast to drop from 2.4% to 1.9%. Obviously, the 2013 to 2014 hockeystick is laughable at best.

China: so much for the Great Chinese growth miracle: >> Read More

WASHINGTON: World Bank has barred Larsen &Toubro (L&T) from doing any business with it or the projects funded by it for 6 months, after finding that a senior executive of the Indian conglomerate has indulged in fraud.

The debarment will continue till September 6, making L&T ineligible for being awarded contracts for any World Bank- funded projects, from receiving any loan proceeds made by the Bank or participating in any Bank-financed project.

The sanction order, dated March 7, said that L&T’s ineligibility would continue across the entire World Bank group and has been imposed on L&T “for fraudulent practices” as per the bank’s Procurement Guidelines against Fraud and Corruption. >> Read More

Everyone has been desperately waiting for this. At 3:00 pm it will be publicly released. Hopefully, shortly thereafter we can proceed with the discussion of important things such as the complete economic collapse of not only America, but the entire world (which is apparently now hooked into voting for Obama as disclosed earlier). For those strapped for time here is the summary: Romneys 2011 tax rate 14.1%, Charity donations: 30%; Obamas tax rate: 20.5%, Charity donations: 22%. And going back, “Over the entire 20-year period, the average annual effective federal tax rate was 20.20%.”

From Romney’s website:

This morning, Gov. and Mrs. Romney filed their 2011 tax return with the IRS. At 3:00pm today, the Romney for President campaign will be posting the 2011 return online.

The complete 2011 tax return, with full schedules, statements, and attachments, will be made available with all other previously-disclosed information at www.mittromney.com/disclosure.

Also posted will be a notarized letter from the Romneys’ tax preparer, PricewaterhouseCoopers, LLP (PWC), giving a summary of tax rates from the Romneys’ tax returns for the 20-year period of 1990-2009.

In advance of the posting of these new documents, I wanted to provide some top-line details.

Regarding the newly-filed 2011 Tax Return: >> Read More

With the Great June Socialist Revolution spilling over into July, here are some details as they become available from France:

• FRANCE TO HAVE NEW TAX RATE OF 45% FOR WEALTHY
• FRANCE TO TAX INCOME OF MORE THAN EU1 MLN AT 75%, AYRAULT SAYS
• FRANCE TO TAX CAPITAL INCOME AT SAME LEVEL AS WAGES
• FRANCE TO RAISE TAXES FOR LARGE COMPANIES, BANKS, OIL FIRMS

But… FRANCE TO ANNUL PLANNED VAT INCREASE PLANNED BY SARKOZY

After all, it’s only fair. In other news, we are rotating our secular long thesis away from Belgian caterers and into tax offshoring advisors, now that nobody in the 1% will pay any taxes ever again.

The good news is that with the entire world set to adopt 100%+ taxes on “wealthy” individuals as defined arbitrarily by Ph.Ds, there will be no place to hide. 

Economic Debunker Steve Keen is interviewed by outspoken Irish journalist Vincent Browne and no holds are barred as he describes the Maastricht Treaty as a suicide pact of critically poor central-planning design of a supposed market-economy, based on financial crises never occurring, locking European governments into an austere path when stimulus is required. “Ultimately the Euro has to fail and the longer we continue the farce of believing we can make it function the larger the ultimate crash will be” is how Keen portrays the situation and describes the foreign-exchange, fiscal policy, and monetary policy shackles that have created and exaggerated the situation. This leads into a longer discussion of the state of the World and its inability to ‘export into the ponzi’ like Japan could from 1990 to 2010 since the entire developed world is trying to do the same thing and “there is no ponzi scheme on Mars that we can export to” leaving the globe without Japan’s initial way out. The must-watch 10 minute interview goes on to discuss the endgame (a break in the political compact based on austerity pressures and military or political coups) as Keen sums up “it’s amazing to see us repeating the same mistakes that were made during the 1930s but we are doing just that.” ending with some potential solutions noting that there is no easy way out of this.

“You need to have accelerating debt forever to have rising asset prices forever and not even debt can accelerate forever”

7,600,000,000,000 Dollars of Debt Must Be Rolled Over In 2012…

When it comes to government debt, it is not just new debt that is the problem.  Every single year, governments around the world must “roll over” gigantic mountains of debt that come due.  That means that the actual borrowing that takes place each year is far greater than the yearly budget deficits that you see talked about on television.  In 2012, a total of 7,600,000,000,000 dollars of debt must be rolled over by the G-7 nations, Brazil, Russia, India and China.  When you add in interest payments, that number rises to over $8 trillion.  And that does not even include any new borrowing that all of those nations will do in 2012.  This is a debt bomb that could devastate the entire global economy at any time.  Everything will be fine as long as global lenders are willing to lend these countries gigantic mountains of very cheap money.  But if that changes, and there are already a multitude of signs that a massive global credit crunch has begun, it will mean a complete and total financial nightmare for the entire world.

CLICK HERE TO READ COMPLETE ARTICLE

Remember, back in the day, when a bankruptcy was simply called a bankruptcy? Naturally, this was well before ISDA came on the scene and footnoted the living feces out of everything by claiming that a bankruptcy is never a bankruptcy, as long as the creditors agree to 99.999% losses at gunpoint, with electrodes strapped to their testicles, submerged in a tank full of rabid piranhas, it they just sign a piece of paper (preferably in their own blood) saying the vaseline-free gang abuse was consensual. Well, now we learn that as the global insolvency wave finally moves to China, a bankruptcy is now called something even less scary: “deferred loan payments” (and also explains why suddenly Japan is going to have to bail China out and buy its bonds, because somehow when China fails, it is the turn of the country that started the whole deflationary collapse to step to the plate). After all, who in their right mind would want to scare the public that the entire world is now broke. Certainly not SWIFT. And certainly not that paragon of 8%+ annual growth, where no matter how many layers of lipstick are applied, the piggyness of it all is shining through ever more acutely. Because here are the facts, from China Daily, and they speaks for themselves: “China’s biggest provincial borrowers aredeferring payment on their loans just two months after the country’s regulator said some local government companies would be allowed to do so….Hunan Provincial Expressway Construction Group is delaying payment on 3.11 billion yuan in interest, documents governing the securities show this month. Guangdong Provincial Communications Group Co, the second-largest debtor, is following suit. So are two others among the biggest 11 debtors,for a total of 30.16 billion yuan, according to bond prospectuses from 55 local authorities that have raised money in capital marketssince the beginning of November.” So not even two months in and companies are already becoming serial defaulters, pardon, “loan payment deferrers?” And China is supposed to bail out the world? Ironically, in a world in which can kicking is now an art form, China will show everyone just how it is done, by effectively upturning the capital structure and saying that paying interest is, well, optional. In the immortal words of the comrade from Georgia, “no coupon, no problem.”

Our advice: go long Teva, which recently acquired Cephalon, and its wonderful drug Provigil, which is basically legalized cocaine, speed, meth and heroin all in one perfectly legal pill, as the newsflow, up until now only picking up with the idiot headlines out of Europe at 3 am Eastern is about to become one constant 24/7 flashing red rumor/disinformation mill. Also, next time someone wants to make THE drug cocktail of choice for the headline reacting speed trading junkie, please name it appropriately. Jeffrey will suffice.

More on China’s piglipsticking:

 As local governments delay payments for projects commissioned as part of the stimulus to ward off recession in 2009, less money is available for bank lending even as China is taking steps to inject more into the economy. The central bank has held interest rates at 6.56 percent since July to boost the economy, while the US Federal Reserve and the Bank of Japan have kept benchmark rates near zero since 2008.

  >> Read More