Juggling Dynamite

The Bank of Japan spooked another massive short-covering rally in global stocks today even while central banks are clearly not stimulating the global economy and deflation continues to haunt them with mounting downside to global revenues, GDP, emerging markets, currencies, earnings, over-valued stocks and commodities and a wide world full of highly indebted households, governments and corporations.

And last but not least, there is the pain deflation brings to precious metals, where gold and silver today fell to levels first breached in 2010 when ‘stimulus’ efforts were widely predicted to create run away inflation and the demise of the US dollar…

Bloomberg looks at gold as it pertains to the dollar, rising equities and tame inflation deflation.  Here is a direct video link.

Four of the big 6 Canadian bank CEO’s are cashing out this year at the top of the Canadian consumer credit bubble. After reaping a fortune working to ramp the country up in debt and financial leverage over the past 14 years, TD’s retiring Ed Clarke says he’s worried about Canada looking over the next decade. He also admits “I’m paid too much”, but will continue giving some to charity. Thanks Ed.  Here is a direct video link.

Here’s an update on the Canadian TSX broad market and its internals. With the energy sector crashing the past 4 months, the Canadian stock market is now being levitated (below its 2008 cycle peak) on its egregiously over-priced bank shares which now comprise more than 38% of the index market cap. But wait…financials are not a GDP-driving sector but a tax on the real economy…who’s going to drive growth from here as the resource sector is imploding back to its 2009 recession lows? Good question to ask.

Overnight we heard news of more legal charges coming at Citigroup. The same Citi that’s predecessor National City Bank was central in creating the leverage bubble and crash of 1929; the same Citibank that paid billions in fines for its role in the frauds at Enron, Worldcom and Global Crossings in 2001, the same Citi that has been saved from a deserved demise more than once by taxpayer bailouts, and most recently in 2008. In the latest round of ‘liar’s poker’, Citi announced that it was reducing its previously reported profit due to a $600 million increase in legal charges which brings such expenses to $1.55 billion and cut net income to $2.84 billion.

How to do you repeatedly break the law and get away with it? Its amazing what latitude a few billion in legal fees can buy you. Not to mention the untolled millions ‘invested’ in politicians and policy makers, so that when you do implode on reckless risk taking every few years, the taxpayers reimburse your losses. It’s an incredible business model. See: Longer legal shadow falls over Citi

“The thunder grows louder the closer you are to the lightning. In that sense, Citigroup ’s surprise cut to third-quarter results because of higher-than-reported legal expenses, coupled with large litigation charges at Deutsche Bank , UBS and Barclays earlier this week, suggests a storm is about to break.”

As it did with gangsters in the ’20’s, today the world glamorizes and celebrates Banksters at a crippling cost to everything else.

Michael Lewis was on Charlie Rose last night talking about the 25th anniversary edition of his first Wall Street tell-all Liar’s Poker. Here is a direct video link.