Train's Letter to The Bishop of Lincoln, et al

In your "Letter to the Faithful" regarding the Obama Administration's abortion, contraception, and sterilization diktats, you made the following statement:

"...like the martyrs of old, we must be prepared to accept suffering which could include heavy fines and imprisonment..."

DARE YOU decree the role of "martyr" upon the faithful who will suffer because of the Bishop's collective failure to heed their warnings when the "Patient Protection and Affordable Care Act" was being discussed publicly prior to being voted on?

DARE YOU take the mantle of "martyr" upon yourselves, who failed to recognize the obvious threat to liberty -- religious and otherwise -- that such a draconian body of legislation presents --a threat so obvious that even laypeople recognized it, and communicated their concerns to you?

DARE YOU absolve yourselves from your complete failure to warn the lay faithful when one of the most anti-life presidential candidates in history was using carnival side-show tactics to seduce voters, many of whom are your parishioners, into supporting him in the election?

DARE YOU absolve yourselves from your failure to have read at Mass your concerns about his pro-abortion position, or any of his other questionable attributes, which the media failed to scrutinize, or to have read at Mass your concerns about "Patient Protection and Affordable Care Act"?

DARE YOU ignore the overt solicitations -- even at Mass -- by Obama supporters of other communicants, which, again, you failed to speak out on?

IF WE ARE MARTYRS, is our blood on your hands?

On loving New York

Finally figured it out. It's like this: As with anything else that is beautiful to behold, the more you get into her, the more she runs your life into the ground.

You can quote me.

Debt Rally

US Equity futures are up, this Sunday eve, on rumors that Italy is about to go another $700+ billion into debt.

It's a crazy, mixed-up world.

OWS, MFG, and BHO

We invite you to ponder the possible connections between the notorious acronyms. Here are some helpful hints to get you started:

If the Left is decrying something, it is usually to distract from the fact that it is embracing it. Thus, if the Left -- OWS -- is demonizing "Wall Street", look for the Left -- BHO -- to be making love to IT -- MFG.

The Left's -- Jon Corzine's -- Wall Street mistress is MF Global, a Primary Dealer. A primary dealer is one of the few privileged firms that handle securities transactions for the US Treasury. The Treasury has been a very active customer since TARP and various "stimulus" initiatives under the Leftist -- BHO -- administration. We're not sure how they're all connected to companies like Solyndra, or the to the Greek and various other Euro states.

We can't fathom why Corzine's MFG would be stealing (allegedly) over a billion dollars from its retail and institutional clients -- perhaps Treasury needed a little margin. Or where the Greek promise to invest a billion dollars in solar initiatives to "grow" its economy fits in. But we do know that OWS and MFG and BHO (and company) are Fellow Travelers, so we await the eventual unveiling of all the connections.

MF Global -- Follow the Money

We think it would be instructive to know just what (if any) role Corzine's MF Global played in the administration's unofficial stimulus programs.

Maybe it's an empty hunch. But maybe not. Corzine's a bright and well connected fellow. People who run firms like Goldman Sachs aren't likely to let their own firms blow up. There is already a good deal about this event that doesn't make sense.

Futures firms have been connected with political money laundering before. Has everyone forgotten Hillary Clinton's $100 cattle-futures investment at Refco that -- what luck! -- ballooned to $100,000?

Greek Referendum Blues

If equities are down 5% in two days because Greece is putting the EU bailout plan to a referendum, as Bloomberg reports, there's only one thing to do.

Exactly what alternative does Greece have?

EU To Ban Naked CDS on Sovereign Debt

Bloomberg reports:

The European Union reached a deal as part of a short-selling law that will pave the way for an optional ban on naked credit-default swaps on sovereign debt.

This is as near to a no-brainer as it gets. In principal, naked CDS are the financial equivalent of nuclear warheads on ICBM's. It's great if you can buy 'em, but whoever sells to you -- i.e. the big bank with the 20-somethings gunning for bonuses on the trading desks -- has to be bailed out when the SovBonds are inevitably downgraded.

This signals a streak of common sense and resolve that we find a refreshing surprise. It is the single piece of good news we've seen from the EU all summer.

Not This Week

Despite demands by the G20 that Europe's debt problems -- likely the largest and most convoluted insolvency in history -- be "fixed in a week", cooler heads respond that it's not going to happen.

Angela Merkel:

“...dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled...The search for an end to the crisis “surely extends well into next year.”

Nouriel Roubini:

“The problems in the eurozone are chronic” and “won’t go away,” He said EFSF needs to be more than four times its current size to be effective.

The existence of nearly incalculable amounts of unpayable bills collecting in the offices Europe's public and private financial institutions suggest that this dose of reality isn't likely going to be heeded.

Why Johnny Can't Think

Bloomberg reports:

Children as young as 4 years old may now be treated with medications such as Novartis AG (NOVN)’s Ritalin for attention deficit hyperactivity disorder, under new guidelines from the American Academy of Pediatrics.

Though it is no doubt "for the children," it seems like the perfect solution for overworked parents, teachers, and "professional caregivers." And it might be the antidote to the developing personality; and useful for nipping in the bud those embarassing and politically incorrect tendencies that little ones might display.

It's not a worthy excuse, but might this also be why Johnny kills his parents when he becomes a teenager?

"Occupy the White House 2012"

Let us call the "Occupy" campaign what it really is: a campaign. It is an organized mobilization of civil disturbance that appears to be proceeding according a script. It has substantial financial backing (the "protesters" are being paid). It has the full attention of the media, which begin every newscast with enthusiastic reminders of its existence. It has the "support" of municipal services unions. Such support includes the refusal by NYC Transit Union members, who normally drive the City's buses, to transport to jail miscreant protesters who have been arrested. The miscreants, in turn, support the unions by creating conditions which provide City employees with copious and well-compensated overtime (one month in, unionized NYPD officers have been paid $3.5 million in overtime on Occupy assignments, according to the Mayor's office).

"Occupy" has made such notorious municipal Nannies as New York City Mayor Michael Bloomberg render himself so completely docile to it that he won't even bother to clean the pollution-filled park where the would-be-world-changers have set up their tent city. You can bet if they were a congregation of homeless they would have been unceremoniously shooed from the park without attracting more than a passing remark from the media.

The timing of this campaign is unfortunate, distracting the media as it does from those other campaigns -- the presidential ones. On that note, have you noticed that Occupy the World has many of the earmarks of the last presidential campaign? Let's run them down (the similarities, that is):

As noted, it's clearly well organized. Its ground soldiers are of the same demographics that were so effective last time -- young, energetic, college students who got paid to be obnoxious and demanding. It is a media darling, as was the last campaign to Change the world (it even has an irresistibly easy-to-repeat slogan). Union support? Check! Left-leaning billionaire support? Check! International support? Check. Headlines today was that Rome was billowing smoke and 40 policemen had been injured in a sympathetic "Occupy" event.

We would go so far as to say that "Occupy the World" is really just Obama 2008 2.0 with an edge -- a potentially dangerous edge. The danger comes from the fact that these protesters-for-hire aren't pretending to be nice idealistic youngsters, like last time. They're on the offense now, "occupying" this place and that place. They aren't quite on the warpath, but they are wearing the warpaint and looking restless.

Occupy's raison d'etre is, of course, specious. Likely none of its paid participants has seen his life savings disappear in a failed corporate experiment. Safe to say that none has been evicted from the family home; or suffered any other devastating loss of equity. Even those for whom this campaign isn't a first job can't possibly have worked long enough or paid enough in taxes to justify a claim to anything besides the right to vote. Or to hold a job. Or, of course, to peaceably assemble. Or to remain silent, which is our suggestion.

Beyond being globally obnoxious, this group is willfully denying civil authority, and that affects the rest of us. They have told the mayor of New York City, Michael Bloomberg, that they will not let him clean the park in which they are exercising all manner of bodily function. But the rest of us pay taxes to have our parks kept clean (and sanitary) so that we can enjoy them with friends and family. At some point, the rest of us are going to demand that the city fulfill its obligations to us. And that might just involve a confrontation with the obnoxious professional layabouts.

Which brings us back to the dangerous edge of the Occupy campaign. Being as it is a boilerplate production of the "student movements" of the 1960's, it doesn't, ah, take a weatherman to know that the wind is blowing toward increasingly destructive civil unrest.

Given the very direct lines of influence that connect the misguided mob known as "Occupy" to the Obama administration and its leftist friends in all manner of high places, if you don't fear for the Republic, you're not paying attention.

Capitalism Doesn't Create Bubbles

People do.

It's Not A Death Panel

End-of-Life Surgery May Be Overused in Medicare, Harvard Researchers Say

“In a lot of places, we’re doing a lot of these surgeries I think unnecessarily,” Jha said in an interview. “We’re not having the kinds of conversations with patients that we need to have, about what they want out of their last few days and how we help them achieve those goals.”

Or, how to help them help the Single Payer achieve its goals: cost reduction.

We recommend searching "the intellectual roots of the Third Reich" to see what the Ivory Tower was saying about who should and should not be allowed to live during the last era in which it was called upon the answer the question.

Interest Rate Pressure Creating "Perfect Storm" of Corporate Pension Deficits

This is a big story that you're not hearing much about. Bloomberg reports:

Company pensions in the U.S. fell behind future payouts to retirees by the most ever in September, as stocks fell and the slowing economy and Federal Reserve policy drove down bond yields, according to actuarial and consulting firm Milliman Inc.

The deficit between the assets of the 100 largest company pensions and projected liabilities widened by a record $124 billion in September to $439 billion, Seattle-based Milliman said today in a statement, based on data going back to 2000. Investment assets fell $31 billion to $1.175 trillion, while obligations to retirees rose $93 billion to $1.614 trillion.

“We’ve been talking about how interest rates are driving pension funded status for several years now,” John Ehrhardt, a principal and consulting actuary in New York with Milliman, wrote Oct. 5 in an e-mail. “The perfect storm has been brewing all summer. In September the storm arrived with a vengeance.”

This is nearly a half-trillion dollars that the Federal government is on the hook for, which might not be showing up in deficit numbers. Another "perfect storm."

EU Readies Coordinated Bank Aid Push

Bloomberg reports:

EU Readies Coordinated Bank Aid Push

The European Commission is pushing for a coordinated capital injection for banks to shield them from the fallout of a potential Greek default as Germany urges each country to prepare its own blueprint.

“We are determined to do everything necessary to ..." [...blah blah blah blah...] the commission’s president, Jose Barroso, told reporters in Brussels today. “Close coordination at European level is essential.”

This is tortuous. The sooner we get it over with, the better. Do your thing, markets bounce, more crap hits the fan, and we get the washout the market is waiting for. Why prolong the inevitable? And why, praytell, should the world (via the IMF) sit around and let you socialize your local debt to it?

Bad Cop Merkel: No Eurobonds For You

Bloomberg reports:

Merkel Says Those Advocating Crisis Endgame Have ‘No Clue’

German Chancellor Angela Merkel stiffened her resistance to joint euro-area bond sales, saying that investors yearning for a single gesture that can end Europe’s sovereign debt crisis now will be disappointed.

She's talking a hard line. When she's done, there will be a eurobond issue.

"Fed Stands Ready to Take Further Action"

Well, then. This ought to make everything OK. Bloomberg reports:

The Fed “will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability,” Bernanke said today in testimony to Congress’s Joint Economic Committee in Washington.

We can breathe a sigh of relief. Happy days are here again, because everything else the Fed has done to promote a "stronger economic recovery," in any context, has been so effective.

It will be noted that Bernanke uttered the "D" word with regard housing -- it's "depressed." Is depression contagious?

Housing, which had been a “significant driver of recovery from most recessions” in the U.S. since World War II, is now among industries contributing to the “slower-than-expected rate of expansion,” Bernanke said.

We predict you'll be seeing the word "depression" more in the coming weeks and months.

How To Kill A Market, the Unending Saga

EU Proposes Financial Transaction Tax for 2014

Go read it if you want. We just wanted to point out that, just when you think they're out of bad ideas, they manage to come up with more.

Comfortably Numb: Markets Ignore the Perfect Storm

The eyes, ears, and mouths of record are mesmerized by the European debt drama. This is the escapist method of coping at its most devious. It's like being distracted from the stack of unpaid bills on your desk by watching your neighbor's car being repossessed.

Day by day in the US, the vital signs show the economy getting weaker and, if it were possible, weaker still. Consumer confidence, lower. Home prices, lower. Home sales, lower. Initial jobless claims averaging over 400,000 continuously for over 3 years. The unemployment rate remains high even by its own dubious calculus. The once mighty America once again beset by Malaise 2.0, imposed upon it by a regime that makes honest people wonder how so many bad ideas, so many laws antagonistic to business, and so many actions that look fraudulent can emanate from one house on Pennsylvania Avenue.

The finance head at Lloyd's of London -- the world's most experienced students of risk -- recently pulled the firm's deposits from certain European banks. His rationale: "if the government is at risk, you know it will take the nation's banks down with it." Here in the US, the federal government's habit of behaving like a compulsive credit junkie has been exposed by the downgrade of its credit rating. Yet it remains on a credit binge of fantastic proportions. We know that the end of this cannot be a happy one. Is the government at risk? The nation's not-so-bailed-out banks?

You'll have to tune in later. Stocks are "rallying on news of European debt resolution hopes."

[This post is editorial, as opposed to event-related. In fact three indicators -- home prices, consumer confidence, and capital goods orders have all increased this morning. We welcome these signs of life but won't refuse to point out that economic activity in some form or another must go on, no matter how perfect a record of abysmal economic policies a regime accumulates. The economy hasn't shown such signs for months; and having been in such decline for such a long period, we argue it is due for some minimal signs of activity, even as a comatose patient registers a heartbeat once in while. We certainly will not countenance any claim by the administration that anything it is doing is helping the economy in any way, because nearly everything it is doing is suffocating it. We wistfully hope that our own "capitulation to malaise" is a sign that's a bottom, at least for a while.]

Things Treasury Secretaries Should Not Say

...failure to act threaten[s] “cascading default, bank runs and catastrophic risk” for the global economy.

Context:

European officials are under pressure to intensify efforts to contain their 18-month debt crisis as Greece teeters on the brink of default. U.S. Treasury Secretary Timothy F. Geithner called on governments to unite with the ECB to beef-up the capacity of their 440 billion-euro ($594 billion) bailout fund, warning that failure to act threatened “cascading default, bank runs and catastrophic risk” for the global economy.

European Debt Crisis: Fighting Leverage With Leverage

From Townhall.com:

The rumor mills are flying this Saturday regarding a Multi-trillion plan to save the eurozone....Mish: Will the ECB, IMF, and France go along with that? What about the German parliament?...

Mish, the Eurozone ain't going anywhere, so it doesn't matter "is so-and-so going to go along with that?" Everyone will be made to see that it's in his interest to "go along." This much can be counted on, even if the means which bring it about are anybody's guess.

Telegraph:The second leg of the plan is to bolster the EFSF. Economists have estimated it would need about Eu2 trillion of firepower to meet Italy and Spain’s financing needs in the event that the two countries were shut out of the markets. Officials are working on a way to leverage the EFSF through the European Central Bank to reach the target.

The complex deal would see the EFSF provide a loss-bearing “equity” tranche of any bail-out fund and the ECB the rest in protected “debt”. If the EFSF bore the first 20pc of any loss, the fund’s warchest would effectively be bolstered to Eu 2 trillion. If the EFSF bore the first 40pc of any loss, the fund would be able to deploy Eu1 trillion.

Using leverage in this way would allow governments substantially to increase the resources available to the EFSF without having to go back to national parliaments for approval, which in a number of eurozone countries would prove highly problematic.

We like this. Confront a painful debt deleveraging with more leverage. This is telling.

What does it tell? It tells that an actual deleveraging is, as Soros put it, "too terrible to contemplate." It tells that the brightest minds in the world are committed to forestalling the inevitable, to rolling the stone uphill, to suspending the laws of economics and mathematics, to, basically, faking it. Can you do this with your debts?

Basel Committee to Reconsider Capital Surcharges

Basel Said to Weigh Bank Criticisms of Too-Big-to-Fail Capital Surcharge

The Basel Committee on Banking Supervision will next week consider the need for changes to capital surcharges on the biggest banks amid warnings from lenders that the measures may stymie the financial system’s recovery, according to two people familiar with the talks.

They must have read this:

The market is already imposing credit restrictions. Redundant capital restriction might be too much restriction. And the market will not cease to obey market laws; so the regulators ought to just let her do her thing.

Glad you're paying attention, guys.

Chinese Developers Plunge in HK...

Chinese Developers Plunge in Hong Kong trading on Trust Financing Report

Chinese developers plunged in Hong Kong trading after Reuters said the nation’s banking regulator told trust companies to report dealings with Greentown China Holdings Ltd. (3900), sparking concerns of a funding squeeze.

So, the Government announces that it's going to look at one company, and the whole sector sells off. This bears watching for potential canary-in-the-coal-mine status.

Instability in Asian markets -- we mean, more than the usual -- would be a most inopportune (if not unexpected) development at this time.

How the Elite Panic

IMF’s Lagarde Says ‘Downside Risks’ Are High for Global Economic Recovery

International Monetary Fund Managing Director Christine Lagarde said “downside risks” are high for the world economy.

“We’re in it together and we will be able to solve it together,” Lagarde said in an interview on Bloomberg Television with Tom Keene. “Growth has slowed, the downside risks are high.”

Lagarde said she will try to instill a “sense of urgency” at the IMF’s annual meetings this week.

This is how elites panic: in slow motion, thoughtfully, with an air of assurance. But for our money, it's still panic. They're out of control, grasping for a solution, coming up short repeatedly. They're starting to get desperate, but haven't cast pretenses to the wind quite yet.

The Emperor is Naked

Obama Pledges ‘Coordinated Action’ With Allies to Sustain Global Recovery

President Barack Obama used the annual meeting of the United Nations General Assembly to press leaders, in public and private, to take “coordinated action” to prevent the world’s economy from slipping into a recession.

Mr. President, haven't they told you that there is no "global recovery" to "sustain." Although we certainly can believe the part about "coordinated action."

"Next Big Crisis" Drumbeats in Media are Beginning to Sound Like an Echo Chamber

First, you read it here.

Then Soros said it. And almost before he shut up, Roubini said it. Now El Arian says it. And now the rest have to play catch-up.

The Investment Bank Headcount Indicator Falls Again

Via Bloomberg:

BNP Paribas SA, France’s largest bank, plans “significant” staff reductions at its investment- banking unit as the lender cuts total assets by about 10 percent, Chief Executive Officer Baudouin Prot said.

“It’s essentially at our corporate- and investment-banking platforms,” Prot said in an interview on BFM radio today. “It will be a significant magnitude, but without reaching at all the figures announced by other banks, especially Anglo-Saxon ones,” he said, declining to give further details.

Especially those Anglo-Saxon ones, eh Mr. Prot? A mere month or so, this man arrogantly proclaimed, "We're certainly not going reduce" headcount!

But hey, what are words these days, especially in the mouth of a CEO?

We warned, a month ago, that the mass IB layoffs in Europe portended the next big leg down in this worldwide economic mess, and that the last time we saw banks cutting heads so wantonly was in 2008. We said, in fact, "It's 2008, only more so."

Since then, you are probably aware, that has been proven so, and even George Soros is recently on recorded as agreeing. Nouriel Roubini, too, apparently reads this blog, for he has declared it so.

Now then, it is a leading indicator, and eventually it leads so much that the dog catches up with its tail. In other words, eventually there will be no more headcount to cut. It is at this point that the industry (if it hasn't been regulated out of existence) might be once again sensitive to the market's genuine need for capital, instead of just manufacturing crap to stuff into pension funds all over the world.

There are signs already -- two banks have issued credit-backed CLO's for the first time in a while. That suggest either a certain demand for capital, or a replay of the old tricks -- we're not sure which yet. However Mr. Prot's apparent gift for bad timing is a nominal indicator that the worst may passing before us now.

Sarkozy Told Obama Yuan Should Be in SDR Basket

Sarkozy Told Obama Yuan Should Be in SDR Basket

French President Nicolas Sarkozy told President Barack Obama that the yuan should be included in the International Monetary Fund’s Special Drawing Rights system, a French presidential official said.

We don't think Mr. Sarkozy is going be able to muscle his way into making such big decisions at the IMF just yet; Christine Lagarde is Obama's baby. Nonetheless, this is a press release to be noted, which we will revisit once we've made sense of it.

As for China's part, unofficially, at least, it's playing coy:

Shen Jianguang, chief economist for greater China at Mizuho Securities Asia Ltd. in Hong Kong, who has worked at the IMF and the European Central Bank, said the push to include the yuan in the SDR basket is “a French idea” that is “meaningless for China” because the yuan needs to be convertible first.

“China wants to do it but do it at their own pace which will minimize financial turmoil,” he said.

Shen said Sarkozy could curry more favor with China by pushing Europe to give the Asian nation market-economy status, something Premier Wen Jiabao asked for last week in a speech addressing increasing Chinese investment in Europe.

“There is nothing for free,” Shen said.

Soros Says

He explained that what's happening in Europe is a situation that's "more dangerous" than Lehman. However the authorities will do whatever it takes to keep the system together. "Because the alternative is just too terrible to contemplate."

What could happen: 2 or 3 of the smaller countries could default and leave the Euro, provided its prepared in an orderly way. If it were unprepared, it could disrupt the global financial system.

But the climax won't come in September, he says, because "they're not prepared for it."

"They have to create this EFSF," says Soros, "whatever that stands for, it's a potential for European Treasuries, but it's not yet in existence yet. So they want to bring it in."

Read more: here.

Since we've been saying this for months, we may have to add Mr. Soros to our distinguished list of apparent readers, which is why this is arguably the most influential blog ever.

Obama Says ‘Coordinated Action’ Needed to Sustain Recovery

Read the piece. It's The Lagarde Dictum redux, although coming from her, it read like something more than a disconnected series of prefabricated talking points. The same talking points must have the same author, David Lipton. Whoever he is, he appears to be the puppetmaster of the world financial show.

Lloyd's Pulls Deposits From Some Euro Banks

Lloyd’s of London Pulls Deposits From Banks on Debt Crisis

Sept. 21 (Bloomberg) -- Lloyd’s of London, concerned European governments may be unable to support lenders in a worsening debt crisis, has pulled deposits in some peripheral economies as the European Central Bank provided dollars to one euro-area institution.

The Fed's Fix: Borrow Short, Lend Long?

Fed’s Plan

"The central bank will buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less."

Granted, it's only $400 billion, but "lend long and borrow short" is the universally acknowledged suicidal tendency for any bank. And the Fed is just a really big Bank.

Surely the Board of Governors knows this. Why, then, do it? We can only surmise that they are buying $400 bn in treasuries from, say, the ECB, so that the ECB can continue to provide dollars to European banks.

The ECB and central banks in the US, Japan, the UK and Switzerland announced today that they would offer “US-dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year”.

Yes, so let us see: Fed buys treasuries from ECB, giving ECB dollars. ECB buys the "three month or less" notes from the Fed, using them as collateral for the beleaguered banks? Well, if that's what it was all about, why didn't they just come out and say so?

This is a European bailout, plain and simple. Does this mean things are in a very advanced state of decline?

Stupid, Irresponsible Government Story of the Afternoon

From Bloomberg:

Jefferson County, Alabama, which approved a deal with holders of $3.14 billion of its sewer debt, now needs action by state lawmakers to end a more than three- year saga that kept it on the brink of filing the biggest municipal bankruptcy in U.S. history.

The County Commission voted 4-1 yesterday to accept the terms of the agreement, which includes $1.1 billion in concessions from creditors. JPMorgan Chase & Co. (JPM), which arranged most of the debt, would take the biggest loss. The terms also call for three annual sewer-rate increases of as much as 8.2 percent, followed by annual boosts of no more than 3.25 percent

“It’s time for resolution of this lingering debacle,” said Commissioner Joe Knight, who voted for the settlement. “There is enough blame to go around.”

Well, that's for sure. Let's distill this down to the facts, m'am:

• The County Commission agreed to pay somebody $3.14 billion - with a "b" - for a sewer system for a single county in Alabama. That's a lot of sewer! Well, turns out, there's a whole of, ah, waste down there.
• Now that the contractors' kickbacks have all been spent, the Commission decides to stiff the banks that lent them the money to do it with.
• Oh, and citizens of Jefferson County, Alabama will have their taxes raised anyway.

Europe Rules Out Stimulus...

...Offers No Bank Aid at Geithner Parley

European finance ministers ruled out efforts to prop up the faltering economy and gave no indication of fresh aid for lenders to go along with yesterday’s liquidity lifeline from the European Central Bank.

Apparently they're not overcome by Mr. Geithner's charisma on the continent.

No worries! The ECB is distributing dollars. Why should local finance ministers stick their necks out?

[we pause. we wonder how this plays out...if these locals stiffen their necks, the "crisis" gets deeper, and eventually they cave in, perhaps lose any semblence of national soveriegnty, and we see Eurobonds and big step toward that global monetary union.]

Sarah Palin's Goldfish...

is more popular than Hillary Clinton. But that doesn't prevent the media from running headlines that claim:

Hillary Clinton Rise as Most Popular Politician Prompting Buyers’ Remorse

The most popular national political figure in America today is one who was rejected by her own party three years ago: Secretary of State Hillary Clinton.

And the "buyer's remorse" has nothing whatsoever to do with Herself, and everything to do with the band of low-class thugs that make up the Obama administration.

Here comes Hillary 2.0.

Rebuilding a House of Cards on a Foundation of Sand

Well, what can you do but mix metaphors in a world where stuff like this happens?

The ECB is loaning dollars (debited from presumed future taxpayers of the stagflating US) to bankrupt European banks and governments, and news of this is "offsetting concern...unemployment is worsening" ?

U.S. stocks rose for a fourth day as the European Central Bank and international policy makers coordinated to lend dollars to banks to tame the credit crisis, offsetting concern spurred by signs unemployment is worsening.

We have no doubt that America was once able to shoulder such a burden successfully. But that was the America that manufactured, exported, employed and educated. That was the America your president is running around apologizing for. That is not today's America -- troubled by (leftist) social unrest, racial strife, record unemployment, debt and deficit levels; not the America where schoolchildren have to pass through metal detectors, lest they bring Uzi's to school and shoot their classmates dead, etc.

We said it before, we'll say it again: these maneuvers are not solutions. Any "relief" will be temporary. The only way to counter the evaporation of trillions of dollars in wealth is to create wealth, that is certainly not happening in the US or Europe at the moment, on a net basis.

These policypushers can't buy a good idea, and their "solutions" are only deepening the problem. They will be forced to come up with a grand plan, a whole new game, and that game will be a Global Fed, a Global Currency, and an entirely new regime of inflation to create the illusion of wealth like that which has held the current generation in its spell for as long as it's been alive. This is what politicians specialize in. We don't know how long it will take for things to get desperate enough to finally usher this is, but we know it's coming.

Obama Goes on "Attack Watch"

It's not a good sign when an "audacious" president becomes paranoid.

The story:

This week the Obama campaign launched a new front in the heightened information wars that come with presidential campaigns, with a starkly designed and somewhat controversial new website called Attack Watch. The site enables user-generated submissions of what Obama supporters deem to be unfair or untruthful media attacks on President Obama, his political campaign and his administration’s policy. Almost immediately after launching, right-of-center Internet outlets derided the effort, and a Washington Post article called it a “laughing stock.”

Is there a form to enter the names, addresses, and phone numbers of individuals who make remarks that "supporters deem to be unfair or untruthful...attacks on President Obama, his political campaign and his administration’s policy?"

First there was Obama's Army. Now there's Obama's Intelligence Agency.

Ever Notice That Recessions...

...only decimate the middle class? During a recession (aka a "credit contraction"), the dependent class gets more food stamps, and the rich simply wait it out, and buy stuff at fire sale prices, because they can. The middle class gets laid off, loses everything, gets foreclosed upon, moves in with relatives, gets divorced, commits suicide, fights off stalking by bill collectors, and becomes extinct.

The middle class, upon whose backs much of the work load of the US economy is laid.

RIP.

Meet Your Enemy

This man has made hundreds of millions of dollars finding and selling details of your personal life. Shouldn't you get a royalty?

Ex-Drug Smuggler Turned Data Miner Reclaims a Field He Created

Hank Asher -- high school dropout, cyber pioneer, friend to law enforcers, enemy to child predators, nemesis of privacy advocates, ex-cocaine smuggler -- is back in the business of finding almost everything that’s known about anyone in the U.S.

Law enforcement applauds Asher for his help in catching child-predators. Defenders of privacy may regard the latest version of his system to search databases and collate the results as a menace, as they did his anti-terror Matrix system developed during the Bush administration.

Notwithstanding that the man's access to government and super-secret corporate databases has allowed him to "assist law enforcement" and nail child predators, it must be remembered that such things are window dressing in this story. Such details are designed to keep you from having a proper hatred for the sort of electronic rifling of your file cabinets that self-promoters like this gladly do on behalf of governments, other institutions, and the sorts of dubious law-enforcement washouts who become "private investigators", for as little as two-bits for a look.

This wholesale parsing of your every recorded word and deed is done without accountability to anyone, least of all, to you. This man has made a fortune putting you under the surveillance of professional busybodies.

The "information" gathered becomes the basis for "profiles" of your behavior, psychological assumptions about your very personality that are used to make decisions about you, grant or deny you opportunities; essentially putting the power to judge and affect your life in the hands of...failed cops. You ought to be pissed.

As Promised: Stocks Gain as Germany, France Support Greece

Bloomberg says

Stocks rallied, sending the Standard & Poor’s 500 Index higher for a third day, and the euro extended gains as German and French leaders expressed support for Greece to remain in the euro monetary union and speculation grew that China help Europe’s most-indebted nations

As promised.

Greece to Tap Solar to Save its Economy

In our last post, we related a warning that the Obama administration's direct links to the IMF would result in "senior management" there pushing the same policies to deal with Europe's economic meltdown that were tried (with dismal results) here in the US.

Less than 24 hours later, we read that "Greece Pushes $1.4 Billion in Solar Investment to Boost Economy." Notwithstanding the solar energy "industry's" unbroken 40+ year history of proven economic non-viability, Greece is allegedly determined to pull itself out of its debt morass by hitching its economic star to (ha, no pun intended) the black hole of solar energy.

Bloomberg reports:

Greece Pushes $1.4 Billion in Solar Investment to Boost Economy

Greece, which pays Europe’s highest premium for solar power, said it will fast-track three solar photovoltaic projects with a total investment of 1 billion euros ($1.4 billion) to help revive its economy.

We know that Greece is in a crisis. We know that people in a crisis are sometimes incapable of making good decisions. Does this apply entire nations as well? Is Greece really so traumatized by crisis that it believes writing a check for $1.4 billion to solar industry promoters will "help revive its economy?" Was Greece instead "encouraged" or was it pressured to do so by an IMF that is committed to implementing the Obama administration's meltdown policies abroad? If Greece is going to write the check, whose money is going to back that check up? Wouldn't it be some of the US taxpayer money that has already been pledged to bail out Greece (and other European nations).

It wouldn't be too much of a stretch to wonder if US taxpayer money is being funnelled to solar promoters through Greece, at the direction of the IMF, which is at the direction of Christine Lagarde, who was tutored by David Lipton, who is a former Obama "advisor." Mr. Lipton, who wrote The Lagarde Dictum which was unleashed at Jackson Hole recently, serves as Miss Lagarde's "first deputy" at the IMF. According to Bloomberg, he also "held various positions" at Clinton's Treasury in the 1990's.

We don't think the Greek people are stupid. We do think they are desperate. And we know who the IMF, under the direction of Christine Lagarde, represents. We also know that the Obama administration has demonstrated a willingness to lavish favor upon solar industry operators with an apparent disregard for propriety, viability, perhaps even legality, and at taxpayer expense.

What would be worse: if this press release were sincere, or if it were merely an exercise in propaganda for an industry that the Obama administration has questionable ties to?

Look, we won't beat around the bush: for our money, this is political graft, plain and simple. This is Chicago politics gone global.

Note: See this primer on Solyndra, the solar outfit that took hundreds of millions of taxpayer dollars, in the form of loans, from the Obama administration just before it defaulted on those loans through bankruptcy.

IMF and Obama Administration Now Joined at the Hip (and heart)

We have posted elsewhere about the interesting turn of events which place top Chicago labor/antitrust lawyer Christine Lagarde at the head of the IMF, after the curious turn of events which rendered that office vacant.

We gathered by her resume that she was a fellow traveller with the "Chicago School" -- not the Friedrich Hayek - Milton Friedman "Chicago School," sillies, but the Marx - Daley - Ayers - Emanuel - Wright one -- she was, after all a Chicago labor/antitrust lawyer.

Her declaration at Jackson Hole that the US and ECB must "abandon austerity" -- which can only mean, "forget balancing your budgets and cutting your deficits" -- and employ "stimulus" -- which can only mean, "print more money (for the 'weaker nations,' presumably)" -- we have dubbed The Lagarde Dictum, for its sheer presumption of authority.

Now comes word from Bloomberg about an even deeper "Chicago School" (read, "Obama administration") tie to Miss Lagarde, the International Monetary Fund and The Lagarde Dictum. We take the liberty of emphasizing the points key to this series of posts.

David Lipton, a former adviser to Obama, spent five weeks as a special adviser to Christine Lagarde, the new IMF managing director, before starting as her first deputy this month.

Lipton played a substantial role in drafting a speech Lagarde gave at the Federal Reserve’s annual forum in Jackson Hole, Wyoming, according to three IMF officials who declined to be named because the information isn’t public.

Lagarde said in the speech that European banks should be [urgently] forced to build up their capital to prevent the continent’s debt crisis from infecting more countries.

Lipton held various positions in the 1990s at the Treasury, where he worked with Geithner in the international affairs division.

“The way the U.S. handled the financial crisis and the lessons learned from that could become a much more important part of the IMF message to Europe,” said Eswar Prasad, a senior fellow at the Brookings Institution in Washington and a professor at Cornell University in Ithaca, New York.

“Lipton has been very much a part of what’s been happening in terms of the financial system and broader recovery effects,” Prasad, a former head of the IMF’s financial studies division, said in an interview yesterday. “Almost certainly those lessons are going to be much more incorporated into the senior management’s thinking.”

The IMF and World Bank meet Sept. 23-25 in Washington.

The IMF is looking more and more like an International Fed, or at least an agency of the United States Treasury, every day. And if those agencies' handling of the US financial meltdown are "going to become much more incorporated into [IMF] senior management's thinking," is that a good thing?

We have pointed out elsewhere why The Lagarde Dictum is a disastrous idea both in its prescriptions and in its brazen presumption of authority, and why forcing banks to build additional (Basel III) capital reserves in the midst of a global capital drought could be the final nail in the coffin of the European market economy. Now the situation in the European financial sector is measurably worse. Of Geithner's recent visit to Europe,

The visit “underlines the nervousness of the administration in the U.S. about what’s happening in Europe” and the effect the region’s debt crisis is having on U.S. financial markets, Julian Jessop, chief global economist at Capital Economics Ltd. in London, said in an interview

If Geithner believes that what's bad for Europe's banks is bad for America, why is his team promoting the very policies that will kill their capital markets?

If France and/or Germany elect to resist the pressure to bail out the "weaker nations," will they find themselves at odds with the IMF? Will they find friends in China? Russia? Or will they "see the light" of Lipton's and Geithner's gospel and submit to The Lagarde Dictum? Aren't they already bailing out the weaker Euro nations, by bailing out their own banks that have loaned to said nations? If that's the case, then all the talk is a formality -- the bailouts are underway. As recently as last week, we believed that the markets are pricing in "Eurobonds."

And just who is David Lipton, and why is he shaping global financial policy?

President's "Jobs and Competitiveness Council" Head Moves Operation to Beijing

January 21, 2011: [GE head] Jeffrey Immelt To Head President's Council On Jobs And Competitiveness
July 26, 2011: General Electric Moving Health Care Headquarters To Beijing

Not only are rent and labor cheaper there, but a pseudo-government enterprise is less encumbered by annoying overseers halfway across the globe.

If you're not outraged, you're not paying attention.

The Recovery Continues, continued.

Census Data Shows Rising Poverty, Falling Income

The U.S. poverty rate rose to the highest level in almost two decades and household income fell in 2010, underscoring the lingering impact of the worst economic slump in seven decades...It was the third consecutive annual increase in the poverty rate, a trend that won’t reverse itself without “concerted action” on the part of policy makers...

Third annual increase. And here we go with the "concerted action on the part of policy makers" meme again.

Enough hope and change already. The middle class is an endangered species.

El Arian Smells the Coffee

Bloomberg headline: Europe Close to Banking Crisis: El-Erian. Close? Europe is "close to a banking crisis?" Where has this guy been for the last month?

One need look no further than the first paragraph of the piece to see what's on El Arian's mind: he's just another mouthpiece for IMF head Christine Lagarde:

Pacific Investment Management Co.’s Mohamed A. El-Erian said organizations such as the International Monetary Fund need to act with European banks at risk of being engulfed in the region’s sovereign-debt crisis.

The bottom line on all this is that "cooperation" of the "greater","more aggressive" and "broader" variety, with copious amounts of Geithner's "political will" is to be encouraged, persuaded, and eventually enforced to make it look as though everyone's debt is no longer going to swallow all the wealth the human race has ever and will ever create. As Geithner intimated, the "rich nations" are going to have to bail out "the weak ones." We're talking, for the record, about unified, global socialism, full-blown and out of the closet, as if that needed to be pointed out.

We foresee things getting messy, ugly, confusing, and nonetheless resulting in such "cooperation" and "unity" and a new financial order as described elsewhere in this venue.

Italian Bonds: What's in it for China?

We saw this in the redundantly-named Pragmatic Capitalist and thought it deserved a mention:

THE IRONY BEHIND CHINA’S EUROPEAN BOND BUYING

...Make no mistake, this is an attempt by the Chinese to push the Euro higher and maintain what China views as a favorable exchange rate with EMU nations.

One of Train's first rules is, "Always ask, 'what's in it for them?'"

Heads Will Roll in Finance Sector (again)

Bloomberg:

European banks including UBS AG (UBSN), Barclays Plc (BARC), HSBC Holdings Plc (HSBA), Royal Bank of Scotland Group Plc (RBS) and Credit Suisse Group AG (CSGN) have announced more than 70,000 job cuts since midyear, compared with 42,000 by U.S. peers, according to data compiled by Bloomberg [emphasis added].

As we pointed out elsewhere, the last time the Finance sector slashed jobs in a panic like this was 2008, heralding the mother of all recessions.

The only one reason to not take this as the darkest of clouds on the horizon is the possibility that this desperate move signals that we're that much closer to the end of this train wreck. But we cannot ignore the rule of threes, and by our count, this is "two."

Apocalyptic Headline of the Week (so far)

Israel Surrounded as Arab Spring Turns Darker: Jeffrey Goldberg.

It appears in Bloomberg (yeah, that's where we get alot of stuff). Here's a teaser, go to the link for more...

The Middle East is plunging toward crisis. The early promise of Tahrir Square has been supplanted by dismay that the Egyptian authorities -- such as they are -- allowed mobs to lay siege to the Israeli embassy in Cairo this past weekend.

BofA to Slash 30,000 Jobs in Cost-Cutting Plan

The recovery continues. Bloomberg says:

Bank of America Corp. (BAC), the biggest U.S. lender by assets, will eliminate 30,000 jobs in the next few years as part of Chief Executive Officer Brian T. Moynihan’s plan to bolster profit and the company’s stock...

...Those are part of Project New BAC’s first phase, which focuses on consumer banking, credit cards, home loans and technology, Moynihan said. The second phase will begin in October and continue until April, covering institutional services such as global markets, commercial banking and corporate banking, according to the investor presentation.

The "first phase." Presumably, much of what's left for people to do after the economy goes retrograde can be outsourced or taught to a computer.

From Voice Mail Hell to Flash Crashes: Now Your Doctor is a Computer Algorithm

...if WellPoint is the provider of your government-mandated health insurance and, as the nations largest such entity, it likely is. Here's the press release as it appeared in something called "Business and Health":

...WellPoint said it plans to use Watson's data-crunching to help suggest treatment options and diagnoses to doctors, which is part of a general trend for incorporating computer-influenced supervision into care.

Insurers say the procedure would ensure that doctors and hospitals who adopt electronic medical records and other digital tools will be capable of recording, tracking and checking their work.

The company added that they hope the technology will ...reduce costs.

"Imagine having the ability within three seconds to look through all of that information...at the moment you're caring for that patient," WellPoint's chief medical officer, Dr. Sam Nussbaum, told the Associated Press.

To paraphrase a visionary from another era, "Imagine there's no doctor..."

Citigroup Cuts U.S. Banks’ Profit Estimates 45%

Bloomberg reports:

U.S. banks’ third-quarter profit estimates were cut an average 45 percent by Citigroup Inc. on concern that the global equities rout and volatility in credit markets will pare earnings from trading and investment banking.

In Loving Memory

Fishs Eddy

Europe Banks Valued at Post-Lehman Low

Bloomberg reports:

Investors are valuing European banks at levels not seen since the depths of the credit crunch that followed the collapse of Lehman Brothers Holdings Inc. (LEHMQ) as concern over a Greek default and debt contagion escalates.

As we said, it's 2008, only more so (and even more, since BAC has announced plans to lay off as much as 10% of it's 288,000 employees).

Never Forget September 11, 2001

Remember the innocent victims, and remember the attackers.

It does't matter where you were that day, or what you think today. It's not about what a hero you are -- if you lived through it, you're probably not. It's not about how eloquently you wax about what you think is important about 9/11 -- you didn't say, "Let's roll!" It's not about all the ink and hot air being expended to shape your thoughts and tweak your emotions. That's show business and perception management. There was none of that on 9/11/01.

On the Future of the EU

Greece, and the EU, for that matter, is too big to fail.

Because you can't get a "little" socialist

Bloomberg reports:

Geithner said authorities “need to do whatever they can do to calm these pressures” and that rich European nations need to provide “unequivocal” support for their weak neighbors.

Stark Contrast: Schäuble suggests Asmussen before ECB chief economist [translation]

Der Spiegel says:

It's official: Jörg Asmussen, State Secretary, Federal Ministry of Finance, will succeed Jürgen Stark as chief economist of the European Central Bank. Diesen Vorschlag hat Wolfgang Schäuble dem Euro-Gruppen-Chef Jean-Claude Juncker unterbreitet. This proposal was Wolfgang Schäuble the euro group chief Jean-Claude Juncker presented...Asmussen was willing to assume the position on the Governing Board and assured them he would do everything possible to ensure the stability of the euro-zone.

Asmussen: "willing to assume the position."

Definitely looks like the type.

Germany's top court throws out anti-euro bailout lawsuit

Deutsche Welle reports:

Germany's constitutional court has ruled that the country's contribution to the eurozone bailout fund was legal, but said parliament must have greater say in similar decisions in the future. Markets were up on the news.

Team Players Only Need Apply to ECB Executive Board

Bloomberg reports:

Juergen Stark resigned from the European Central Bank’s Executive Board after protesting the bank’s bond purchases on a conference call earlier this week, said a euro-area central bank official familiar with the meeting.

This isn't so much a "blow" to the ECB as it is a removal of one more element of opposition to the ECB's bailouts of those nations on the brink of debt default.

If you're not in, pally, you're out!

Today's Hunch

Start listening for calls for "greater cooperation" amongst the G20.

We believe indeed that today's key economic challenges require a collective and ambitious action which the G20 is able to impulse.

We mean greater than that.

Germany to "Help"

Bloomberg:

Chancellor Angela Merkel’s government is preparing plans to shore up German banks in the event that Greece fails to meet the terms of its aid package and defaults, three coalition officials said.

So, A loans money to B, and B defaults. The Big Bank makes A whole. Now A can loan more money to B, and presumably even to C and D, without fear of "failing."

And so another episode in the continuing saga of This is the "Greenspan Put" begins. If there were truth in advertising, however, it would be called "The Taxpayer Put."

You read it here first.

Oh, was there a "jobs speech?"

As we consult our quotes, we see the Dow Jones Industrial Average is down 2.11% this morning, having been open a mere two hours.

That must have been some jobs speech!

Lagarde Proposes, Bernanke Disposes

We briefly recap, for your convenience:

Item: Dominique Strauss-Kahn is temporarily and falsely accused of sexually assaulting a hotel "maid" in New York City. "DSK" is eventually released, but not before being summarily removed as head of the International Monetary Fund.

Item: Christine Lagarde, top Chicago labor/antitrust lawyer, finds herself in charge of the global monetary authority.

Item: DSK is on record against using the IMF "as a fist" to bully nations (such as Iceland or perhaps Germany) into making loan guarantees. Lagarde gives no indications of suffering any such scruples.

Item: At the annual Jackson Hole Fed Economic Summit, Lagarde announces that the scheduled IMF speaker has "graciously" given her his slot at the podium (in addition to having been removed from his job). From that podium comes what we have named the Lagarde Dictum: after stating, with her global authority, that said globe was about to enter a "downward spiral", Lagarde instructs "the US and Europe to abandon fiscal austerity and switch to stimulus measures" .

Item: As if on cue, the US and ECB central banks echo her. First, Chicago Fed president Evans:

"the central bank should move 'aggressively' to reduce unemployment, even at the cost of temporarily pushing inflation higher."

Next, ECB head Jean Claude Trichet:

...threats to the euro region have worsened and inflation risks have eased, giving officials the option to take further action should the debt crisis worsen...

And finally yesterday, Fed Chairman Ben Bernanke, in his own passive-aggressive voice, at a speech in Minneapolis:

...A substantial fiscal consolidation in the shorter term could add to the headwinds facing economic growth and hiring...[in Lagarde's terms, "abandon austerity"]...prepared to employ these tools as appropriate...[in Lagarde's terms, "switch to stimulus measures"]...[oh, yeah]...we see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy...[we see inflation but it's not "ingrained."]

It is doubtful that anyone believes that the Fed or the ECB can do anything now to "stimulate economic growth." Certainly this is Mohamed El Arian's opinion, which we find ourselves in agreement with:

Pacific Investment Management Co.’s Mohamed El-Erian said the U.S. faces “serious” economic challenges, including lagging housing and labor markets, that will prove resistant to Federal Reserve stimulus efforts.

According to Bloomberg, he continued:

The world is undergoing a “historical” realignment akin to “tectonic plates shifting,” which is focused on balance sheets, growth dynamics among different countries, and policies or politics, he said.

“The key issue any risk manager faces today is that too many parameters have become variables,” El-Erian said. “A cyclical mindset is not sufficient given the world we live in,” he said. “ You need to think structurally.”

Mohamed must read this blog, for just yesterday we postulated:

you can bet on more "stimulus measures." "Aggressive" ones, to be sure, but we look for novel ones, desperate ones, unheard of ones (we've speculated on some here).

We're certain Christine Lagarde and the rest of the Chicago Gang that seems to be everywhere at once these days is "thinking structurally."

(Lagarde Speaks and then) Trichet: Threats to Euro Region Have Worsened

No sooner does former top Chicago labor/anti-trust lawyer, now IMF head Christine Lagarde instruct "the US and Europe to abandon fiscal austerity and switch to stimulus measures" than European Central Bank President Jean-Claude Trichet echoes her, saying

...threats to the euro region have worsened and inflation risks have eased, giving officials the option to take further action should the debt crisis worsen...

We paraphrase ourselves because the eggheads at these central banks have been paraphrasing Christine Lagarde since she issued the marching orders to the world's two economic powerhouses from Jackson Hole. Falling right in behind, Chicago Fed president Evans has sounded the "amen" for the US and Jean-Claude Trichet for the ECB.

We don't necessarily fault the premise: things are looking awful, even if we don't agree on the reasons why (we say central banks and regulators are ultimately at fault); and "stimulus" would help (we say balance budgets, cut taxes, get rid of obamacare, reign in Basel III, stop paying banks to buy treasuries, and get rid of Barack Obama and his band of thugs). But we do marvel the suddenness of the clarion call and the clarion caller. As a sidebar, we note the active moving of the chess pieces to bring Ms. Lagarde and her unique resume to helm of the International Monetary Fund at such a time as this: Lagarde recently replaced Dominique Strauss-Khan as head of the global monetary authority after he was dismissed when falsely accused of sexually assaulting a NYC hotel maid. At Jackson Hole, the former labor and antitrust lawyer from Chicago was apparently a last minute switch at the podium, as she acknowledges:

And let me also recognize my friend John Lipsky who, after five years of distinguished service as First Deputy Managing Director of the IMF, will be stepping down—and who has been so generous in giving up his speaking slot to me today.

Returning to the Lagarde Dictum, we've lost count of the QE's, but whatever they call it, you can bet on more "stimulus measures." "Aggressive" ones, to be sure, but we look for novel ones, desperate ones, unheard of ones (we've speculated on some here).

Why? Because she said so, that's why.

Lagarde's speech at Jackson Hole.

(Lagarde Speaks and then) Fed’s Evans Calls to Cut Unemployment to 7.5%

No sooner does former top Chicago labor/anti-trust lawyer, now IMF head Christine Lagarde instruct "the US and Europe to abandon fiscal austerity and switch to stimulus measures" than Federal Reserve Bank of Chicago President Charles Evans echoes her, saying "the central bank should move 'aggressively' to reduce unemployment, even at the cost of temporarily pushing inflation higher."

Bloomberg reports:

“Given how truly badly we are doing in meeting our employment mandate, I argue that the Fed should seriously consider actions that would add very significant amounts of policy accommodation,” he said. “Such further policy accommodation does increase the risk that inflation could rise temporarily above our long-term goal of 2 percent.”

IMF, Lagarde, and the fist.

Reuters reports:

...former IMF managing director Dominique Strauss-Kahn told [Iceland's president Grimsson] in January 2010 he was unhappy that the Fund was being used as a "fist" against Iceland.

It stands to reason that if the IMF is to be a "fist" against nations when loan guarantees are needed, then DSK would have to be replaced.

Enter Christine Lagarde.

The Euro has found an anchor.

Swiss Stocks Jump as Central Bank Imposes Ceiling on Franc Rate

The franc weakened as much as 8.7 percent against the euro as the Swiss National Bank set a minimum exchange rate of 1.20 per euro and said it will defend the target with the “utmost determination” if needed.

That last bit means, buying euros "with the utmost determination." Ultimately this seems a move that is antagonistic to the monetary union. An interesting week lies before us.

(BN) Ackermann Says Market Conditions Are Reminiscent of 2008 Financial Crisis

Of course, we said it first: It's 2008, only more so.

Ackerman concurs, a couple of weeks later.

Sept. 5 (Bloomberg) -- Deutsche Bank AG Chief Executive Officer Josef Ackermann said conditions in the stock and bond markets are reminiscent of the financial crisis of late 2008.

“The ‘new normal’ is characterized by volatility and uncertainty -- not only in respect to market developments, but also in consideration of the future of the financial branch,” Ackermann said today at a conference in Frankfurt organized by Euroforum. “All this reminds one of the fall of 2008, even though the European banking sector is significantly better capitalized and less dependent on short-term liquidity.”

But we already told you that. And we told you why. And who can fault him for prepping with what is arguably the most influential blog ever?

The Most Dangerous Woman in the World

Former top Chicago labor/antitrust lawyer Christine Lagarde, who finds herself running the IMF since former head DSK was dismissed, having been falsely accused of sexually assaulting a New York City hotel maid, spoke recently to Der Spiegel. Here is the French National telling a German newspaper what the rest of the world needs to do:

THE International Monetary Fund has called on the US and Europe to abandon fiscal austerity and switch to stimulus measures, warning that the global economy faces a ''threatening downward spiral''.

IMF managing director Christine Lagarde said the outlook had darkened suddenly in past months.

''There has been a clear crisis of confidence that has seriously aggravated the situation. Measures need to be taken to ensure that this vicious circle is broken,'' she told Der Spiegel. Read more.

Global markets react...

Lagarde's speech at Jackson Hole.

A "Downward Spiral" in Pictures

DAX -5%

FTSE -3%

It's a freefall at the moment.

Britain Sees The Way Out

According to Bloomberg,

Prime Minister Cameron to Seek Easing of U.K. Bank Rules, Telegraph Says

U.K. Prime Minister will seek a “significant watering down” of a planned overhaul in banking regulations because the new rules may hurt growth and spur lenders to quit the country, the Sunday Telegraph reported.

Cameron told senior cabinet officials that any proposals from the Independent Commission on Banking to split banks’ retail and investment units or require lenders to raise capital must be reviewed, the newspaper reported, citing unidentified officials. The government is concerned that HSBC Holdings Plc (HSBA) and possibly other banks may move operations away from the U.K. if planned “ring-fencing” rules are implemented, according to the Sunday Telegraph.

There may be hope after all -- and this is it. Unencumbered by the EU as it circles the drain -- has anyone thanked Margaret Thatcher lately?

S&P Rates Subprime Mortgages Higher Than U.S.

Indeed. Reality is beginning to set in. Bloomberg reports:

Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.

S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties. New York-based S&P stripped the U.S. of its top rank on Aug. 5, saying Washington politics were making the country less creditworthy.

Merkel’s Cabinet Approves Larger Euro-Rescue Fund as Dissent Ebbs

We told you so. But notice the masthead above.

Some bits from the Bloomberg piece:

Ministers meeting in Berlin today backed a reworked European Financial Stability Facility including sovereign bond- buying powers, raising Germany’s share of EFSF loan guarantees to 211 billion euros ($305 billion) from 123 billion euros. The measures were agreed on by European leaders at a July 21 summit.

The way is being paved for Eurobonds, as we told you.

Peter Grottian, a politics professor at Berlin’s Free University, said by phone yesterday. “What’s more painful: risking the collapse of the government and a devastating economic backlash, or gritting your teeth and waving through a bill that may be effective even if you don’t understand it?”

We know how to deal with that! "Just pass it so you can read what's in it!"

Getting Germany to bring more of its taxpayer money to the Union's table will be read (and hailed) as great step in the solution to the sovereign debt meltdown, and panicked bondholders will breathe hurricane-strength sighs of relief. Markets worldwide will rally. And why not? They've acquired the souls of once great nations at fire-sale prices.

It remains to be seen whether the dream of surviving The Great European Sovereign Deleveraging has the mojo to stimulate enough "confidence" to resurrect something akin to a functioning economy. We suspect it will seem so. But the rule of three's suggests we're still in the second wave down of the punishment the world financial system has evaded for so long. There will probably be some buyable rallies. But watch your back.