Wednesday, July 10, 2013

Today's Links

1---The Muslim Brotherhood (The Ikhwan) is being marginalized because it was not reforming the state along neoliberal lines fast enough, Class war in Egypt, counterpunch

Egypt is at war. More accurately, Egypt is experiencing yet another battle in its ongoing class war. The battle is so fierce because the primary combatants are the two most powerful social forces in Egypt, both factions of the capitalist class – the military as the state capitalist class and the Ikhwan (the Muslim Brotherhood) representing the competitive capitalist class....

....power in the global order is permitting this counter-revolutionary intervention because the form of state the Ikhwan was constituting was not permissible to the order. This was not because of the group’s religious ideology. The global order tolerates theocracies, see Israel and Saudi Arabia. It was not because of the group’s economic policies. The Ikhwan is neoliberal; they, like Republicans and Tories, are market fundamentalists. The Ikhwan is being marginalized because it was not reforming the state along neoliberal lines fast enough. Because of the group’s material interests in the Egyptian political economy it was slow to accept the conditionalities of the long-negotiated International Monetary Fund loan. Global capital wanted access to Egyptian labor and resources and when financial coercion in the form of a capital strike proved unsuccessful, military coercion was exerted by an American client mechanism in the country. In a move that evidences that the global order wants a different form of Egyptian state faster, Mohammed ElBaradei, a former functionary of that very order, is now the anointed representative of acceptable change.

2---Giant Banks Take Over Real Economy As Well As Financial System … Enabling Manipulation On a Vast Scale, Washington's blog

Goldman Sachs, according to its own recent investment reports, is engaged in “the production, storage, transportation, marketing and trading of numerous commodities, including crude oil, oil products, natural gas, electric power, agricultural products, metals (base and precious), minerals (including uranium), emission credits, coal, freight, liquefied natural gas and related products and indices.”

3--China exports hammered after government "tightens", Reuters

The June export figures followed a government crackdown on the use of fake invoicing that had exaggerated exports earlier this year, and may now reflect the true trade picture, customs officials said.

4---China to crackdown on fake exports deals, FT
China keeps a tight grip on foreign exchange flows in and out of the country, worried that speculators could fuel asset bubbles and inflation.
But despite years of repeated campaigns to limit hot money, an apparent surge in Chinese exports in the first quarter, when other countries reported much weaker data, pointed to a resurgence in inflows. Analysts believe Chinese exporters were over-invoicing as a way of bringing more cash into the country covertly...

Chinese exports in the first quarter reached 18 per cent growth year on year, though the real figure, once the effect of capital inflows is stripped out, is estimated to have been about 5 percentage points lower.
That discrepancy probably exaggerated China’s overall growth in the first quarter, meaning that the economy may have expanded more slowly than the officially reported 7.7 per cent pace, which was already weaker than expectations..

The capital inflows also risk undermining efforts by the government to rein in housing prices and absorb some of the liquidity that has started to put upward pressure on inflation. After a small deficit in its capital account last year China swung to a $101.8bn surplus in the first quarter this year, alongside a $55.2bn current account surplus.
Is Mark Carney a Canadian central banker, private Swiss mega-banker, regulator, or all three? Nowadays its difficult to put a cigarette paper between any of these jobs. The world's central banks have neat little monopolies in national currencies and are almost exclusively private concerns playing the casino economy for private profit.
Democratic institutions are perceived in the same 'polite' circles to 'interfere with' rather than 'oversee' for the people central banks' schemes. So don't be too surprised if Mark Carney spares not a thought for democracy, that passé idea that central bankers are public servants.

The extraction of Britain's central bank from democratic oversight was rubber stamped in a 1997 deal which brought Britain's left-wing Labour party into power. Her Majesty's Treasury became a wholly-owned-subsidiary of the City Of London. ...

Adam LeBor's new analysis of the BIS: Tower of Basel, The Shadowy History of the Secret Bank that Runs the World sounds like the stuff of political thriller feature film conspiracy drama. Populated by power-hungry characters William Tell and his companions would delight in speedily doing away with...

So how far are Carney's 'Beasts of Basel' from the 'Gnomes of Zurich?

Not far. The pre-war BIS helped fund Nazi Germany's arms build-up. LeBor points out the BIS took dubious gold deposits and provided Hitler with desperately needed foreign exchange during the war. Like the medieval Knights Templar, he explains, BIS headquarters is an extraterritorial jurisdiction subject neither to Swiss nor international law.

So is Carney really that big an extra-judicial Swiss cheese? LeBor doesn't mince words, he considers Carney's role at BIS has been 'pivotal'.

At Canada's international post-war Bretton Woods conference US Treasury Secretary Henry Morgenthau and his assistant Harry Dexter White detailed the Nazi aid and got a resolution passed demanding the liquidation of the BIS "at the earliest possible moment". This was despite a supposed ally, Bank of England governor Montagu Norman, working against them behind the scenes.
This unequivocal decision to dissolve the bank that had been Hitler's lifeline was discussed and delayed, but never implemented. The resolution lacked a time limit, demonstrating, to those who have eyes to see, that the BIS was and remains above any law

6---Saudi-backed coup – expert (US, too!), RT

Multi-billion-dollar aid from Saudi Arabia and the UAE is another sign that these two countries had a hand in the military coup which took place in Egypt, believes RT’s contributing analyst in London, Afshin Rattansi.  

We now realize it is much more a Saudi-backed military coup. And as for this General al-Sisi person, who is a former military attaché in Saudi Arabia, he is Saudi’s man…  Saudi Arabia, they’ve taken over the largest country in the Arab world,” Rattansi said.

He also described the current interim leaders of Egypt – President Mansour and Prime Minister Beblawi, as “puppets of Saudi Arabia”, who will be ousted at once if they attempt to criticize Saudi Arabia or the UAE.

Commenting on the US role in the situation in Egypt, Rattansi said that “President Obama… is just dragging his heels over – he doesn’t want to use the word ‘coup’ because he doesn’t want to stop being able to subsidize the Egyptian military to the tune of so many hundreds of thousands of dollars.”

7---NSA spied on Latin America for energy and military intel, RT

The US government retrieved key data on a number of issues including the oil market, drugs trade and political movements. Colombia is a top priority for the US, registering the most spy activity, with Mexico, Venezuela and Brazil following closely behind. In addition, Argentina, Ecuador, Panama, Costa Rica, Nicaragua, Honduras, Paraguay, Chile, Peru and El Salvador are under surveillance, though to a lesser degree.  

8---Watchdogs warn 1.7 million homeowners risk foreclosing, feds unprepared, WA Guardian

In fact, the inspectors general at the Federal Housing Finance Agency (FHFA) and the Department of Housing and Urban Development (HUD) warn that a stunning 1.7 million mortgages are 90 days or more delinquent, putting them in danger of foreclosure. Such homes are considered "shadow inventory" in danger of being assumed by the government if the loans default.

"Even a fraction of the shadow inventory falling into foreclosure could considerably swell" taxpayers' liability by increasing the number of foreclosed homes that HUD and the federally-run Fannie Mae and Freddie Mac mortgage giants must maintain, market and sell, the new report warns.
In that event, the bureaucracy risks being overwhelmed.

9---Snowden Seen as Whistle-Blower by Majority in New Poll, Bloomberg

10--38% of Prospective Home Buyers Halt Search Due to Rate Shock, (The end of the faux housing recovery) naked capitalism

We’ve been warning that the sudden rise in mortgage rates was going to create a great deal of buyer sticker shock. It’s already virtually halted refis.

Further confirmation comes from the Urban Turf website:
UrbanTurf polled prospective homebuyers to see if the jump in rates had resulted in a delay in their housing search.
The results were revealing. Of the several hundred buyers who answered the poll, 38 percent said that they would be putting their search on hold because of rising rates, while 57 percent said that they would keep looking. (5 percent were unsure how the rate spike would influence their decision.)
So this sort of report will also indirectly serve as a test of the Fed’s motivation for talking up the taper. If it really wanted just to take some air out of the nascent housing bubble, it’s probably already overshot, although it will take a while to see that in the data. But if it’s motivations are political, in that the central bank is sick of the heat it is taking for QE, or thinks the banks need a more positively sloped yield curve, or just thinks QE may not be such a hot idea after all and it would be getting out as soon as it conceivably can, then even this sort of early warning won’t alter its path. We’ll find out either way soon enough
10---Nathan Tankus: The Fed’s Tapering Troubles and the Real Liquidity Trap, naked capitalism

Since Bernanke started talking about “tapering off” Quantitative Easing, the bond markets have freaked out. This is a very logical reaction.

Before last month, it seemed like QE would go on indefinitely. Once that belief was shaken – even in the slightest fashion – everyone ran to the exits. Bernanke and other Federal Reserve economists appear bewildered by this phenomenon. The impression one gets from their follow-up comments is that they wished they could ask bond speculators “did you read the damn speech?” The answer, of course, is no and for good reason.

All investors need to know is the conditions under which QE (and for that matter, the Zero Interest Rate Policy) will be pursued has changed. Now the substantive change may actually be relatively minor, but that’s irrelevant to speculators. The reason is very simple: those holding assets with longer maturities will take huge capital losses with relatively small changes in interest rates (As a reminder: it is basic “bond math” that a change in interest rates send bond prices in the reverse direction. A rise in interest rates makes bond prices fall and a fall in interest rates make bond prices rise). It is better to exit now when those future changes are uncertain then take even more massive losses

11---Mortgage applications fell for the 8th week of the last 9 at the fastest year-over-year pace in 3 years and slumped to 2 year lows. zero hedge

12---I.M.F. Cuts Global Growth Forecast, NYT

13---Wall Street hates Eliot Spitzer which is why you should like him, Bus Insider

14--IMF, downward revision, WSJ

The International Monetary Fund cut its global growth outlook for this year and next.
The IMF explained its lower forecasts: “Downside risks to global growth prospects still dominate: while old risks remain, new risks have emerged, including the possibility of a longer growth slowdown in emerging market economies, especially given risks of lower potential growth, slowing credit, and possibly tighter financial conditions if the anticipated unwinding of monetary policy stimulus in the United States leads to sustained capital flow reversals.”

15---Americans Take On More Credit-Card Debt, WSJ

But wages stay flat

16---The housing-recovery myth, marketwatch

17---Egyptian military regime plans sharp attack on working class, wsws

18--Expectation for Rates to Rise Spikes in Fannie Mae Survey , DS News

19---Rising Prices Lead to Fewer Investor Purchases, Longer Holding Times, DS News

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