LOS ANGELES (Reuters) - The smell of rotting food and decay inside 10956 South Wilmington Avenue, Los Angeles, was overwhelming.

A burst pipe in the kitchen ceiling leaked water onto a floor
littered with half empty cans, razor blades, odd shoes, stained
clothing and an upturned, mold-ridden sofa. Windows were smashed and
boarded up.

The vacant home was foreclosed on in August 2011 by Bank of America, which has done nothing to repair it.

Of roughly 400 bank-owned homes surveyed in the area, half are in
a state of blight, with a third "seriously blighted," according to two
activist groups, Good Jobs LA and the Alliance of Californians for
Community Empowerment.

U.S. cities struggle with blighted bank-owned homes(Reuters)

 

http://news.yahoo.com/cities-struggle-blighted-bank-owned-homes-04110815...

For those curious what the latest and greatest estimate of the
Spanish bank bailout, which at last count was €100 billion and growing
fast, would look like in US terms, here is a rough and dirty comparison
of the scale we are taking about here...

• Spanish GDP of $1.25 Trillion : US GDP of $15.5 Trillion :: Spanish Bank Bailout of $125 Billion : US Bank Bailout of $1.6 TRILLION

A trillion here... a trillion there...

Or visually:

http://www.zerohedge.com/news/if-spanish-bank-bailout-came-us

--

That's nothing come on! Just one year of deficits. Surely MDB will
explain to us that this is great and we can postopone the problem like
this for another year ?!! Of course this will work as long as they can
print money, but the people being sheeps love to fund the tools of their
enslavement and will happily accept USDs until some later time in the
future when all the wealth has concentrated in the top 0.0001%. Idiots.

----------

That's what I thought too...omg.   been borrowing money at 10% of GDP for several years without blinking

In order to successfully emerge on the other side of this this
painful period with a more sustainable system, he believes the moral
hazard of bailing out the banks is going to have end:

[The banks] have to suffer and suffer badly. They
will have to suffer in such a way that in a decade they will be scared
in order to never behave in this way again. You have to reduce the financial sector to about one third of its current size and
we have to also ultimately set up financial institutions and financial
instruments in such a way that it is no longer desirable from a public
point of view to borrow and gamble in rising assets processes.

The real mistake we made was to let this gambling happen as it has so
many times in the past, however, we let it go on for far longer than we
have ever let it go on for before. Therefore, we have a far greater
financial parasite and a far greater crisis.

http://www.zerohedge.com/news/steve-keen-why-2012-shaping-be-particularly-ugly-year

Heh heh heh... everybody knows what needs to be done. But can't be done. (US political system is owned by bankers.  politicals candidate main money source are banks. Hell Romney himself is a bankster. You really expect bankster base political machine to produce something that will hurt banksters? (yes, the system is that corrupt. expect few fake investigation and theaters, but nothing really changes.)

fortunately, in general world economy (goods and trade) is still functioning relatively well.  There is no 30's style factory collapse or WWII style total world trade breakdown... yet.

However north atlantic banking system is in complete chaos. at this moment nothing happens except hot money running rampage destroying one country after another. This hot money moves faster than politicians and bureaucrats can fix things, shuffling money, bilateral negotiations, etc.

..seeriously what medium country can survive $50-80B hot money being pulled under its feet? One day loan and bond are fine, the next day it stops flowing due to panic. things spiking all over the place. Modern economy can't function like that. manucipalities, factories, now sovereigns are all turned upside down.  Forget those houses.. seriously how much those junk really worth in real economy? bunch of empty pile of bricks, so what. big friggin' deal. (there are more un flown jumbo jets worth billion in material than there are junk houses) Houses/mortgages only matters as fantasy banking assets, which where real problem lies.

on top of this, hot money slosh around between currencies, this create huge fluctuations that disrupt trade. Hence creating even bigger chaos. ( commodity speculation/hot money going in and out/currency fluctuation) It may not be a lot of money from banking point of view, but these are clothing, food, raw materials, trade covers, etc... In a world where global supply chain live in 5% margin or less, 1-2% currency movement kills. Even if Spaniard want to work, they can't get supply chain set up.  Thus we have massive trade slow down.. on top of banksters stop using capital for anything but covering their casino capitalism lost.

 .. well there is the oil war too, creating record oil price in the middle of banking crisis.

basically, this will keep going until the western banking system truly destroy itself, either destroying euro or creating dollar run. I for one am betting on Argentina style dollar implosion. The combination of currency mis-priced and political grid lock is uncanny. Five to ten years. All the symptoms are so similar. Cheap dollar and easy money for period of time, real productive economy crashing, fantasy asset/casino capitalism to the moon... next thing you know.....huge run and everything collapses within weeks.

The political corruption needs to carry itself to its destructive logical ends first.

Japan’s Cabinet approved a bill to
provide sovereign insurance to tanker operators that import
Iranian oil before the full implementation of European Union
sanctions against the Persian Gulf nation.

The government plans to take over coverage for ship owners
and petroleum refiners because they will lose access to Europe’s
reinsurance market after the 27-member EU embargo goes into
effect July 1, the transport ministry said today in a statement.

The full EU ban covers Iranian crude exports and insuring
shipments of the oil. The prohibition means 95 percent of the
world’s tankers will lose insurance if they carry cargo from the
Gulf state as they’re covered by the 13 members of the London-
based International Group of P&I Clubs. A law signed by
President Barack Obama on Dec. 31 blocks countries’ access to
the U.S. financial system if they can’t show they’re reducing
oil imports from Iran. Japan and 10 European nations received
exemptions in March for a renewable period of 180 days.

http://www.bloomberg.com/news/2012-06-11/japan-approves-insurance-for-tankers-affected-by-iranian-ban-1-.html

In one swoop, european shipping insurance industry is relegated into also run/not gonna matter in a few year. Ocean shipping industry is very old. Next to ship building It what makes and break world trade in the long run. (Shipping insurance doesn't matter to US since US has no meaningful merchant ship lines anymore. Neither is US commercial shipyard meaningful. However European banking insurance was still very influential. not anymore.)

This pretty much says it all:

• BOE'S POSEN SAYS TIME FOR CENTRAL BANKS, INCLUDING BOE, TO BUY PRIVATE ASSETS
• POSEN SAYS BUYING PRIVATE-SECTOR ASSETS WOULD HELP ECONOMY

Buy. Real. Assets. Now

http://www.zerohedge.com/news/cue-hyperinflation-5-4-3

I have a pair of sock. left one has hole and right one is missing...  I'll let it go for $1Billion... wanna buy it BOE? sure as hell more valuable than instagram har har...

China's forex reserve growth 'peaked' says Nomura

HONG KONG (MarketWatch) -- China's foreign exchange reserve accumulation
is in the process of peaking out, according to research by Nomura
released Tuesday, which said growth in reserves would gradually diminish
before net outflows beginning in 2015. The research brokerage forecast
China's forex reserves growth of $267 billion in 2012, falling to $189
billion in 2013, and $43 billion 2014. China should experience a decline
beginning in 2015, with a $32 billion net drop anticipated, Nomura
said. Nomura sees the nation's balance of payments slowing coming into
equilibrium, as a stronger Chinese currency undermines China's export
competitiveness while at the same time making foreign goods more
affordable. Meanwhile, foreign direct investment inflows are set to
decline while outflows of investment increase as China seeks to secure
commodities and invest in building up its own multinational
corporations, Nomura said

http://www.marketwatch.com/story/chinas-forex-reserve-growth-peaked-says-nomura-2012-05-29?link=MW_latest_news

It means Yuan is now defacto a hard currency. It doesn't need to keep buying dollar to sustain its peg. It can sustain yuan price despite export growth. It only need to control exchange flow, which it increasingly has more outlet to play with via swap agreement and market opening. note: yuan has gone down against dollar since the crisis. reverse of what people has been predicting.

big question for Fed would be, who is going to buy all those external loan needed to pay for supposedly japan style 'lost decade'? Sure as hell not the chinese. ... going argentina fast...

http://www.zerohedge.com/news/guess-what-else-china-hoarding

Actually, if he’s right about the demographic underpinnings, there’s a
time bomb lurking in the system quite aside from his concerns about
inflation running too hot or too cold: eventually, and as I understand
it fairly soon, those older Chinese who have been frantically saving
because they don’t expect enough grandchildren to support them will
become net dissavers, pulling money out of the banks to live on. And
then, if his basic story is right, the whole system implodes.

http://krugman.blogs.nytimes.com/2012/06/11/financial-repression-chinese-style/

china lived through western imperialism, including opium war, I think few old people in the family is relatively small drag to prosperity than what has happened in the past. I am pretty sure they'll live happily with that knowledge.

India Could get Junk Credit Rating

Credit rating agency Standard and Poor's has warned that India may
become the first among the BRIC - Brazil, Russia, India and China -
countries to lose its investment grade rating, citing slowing GDP growth
and political roadblocks to economic policy making as some of the
factors that could lead to such an action.



Standard & Poor's raised India's long-term sovereign credit rating
to 'BBB-' in January 2007, making India the poorest sovereign (in terms
of per capita GDP) to receive an investment-grade rating. One of the key
elements contributing to the upgrade, and sustaining the current
rating, was India's ability to achieve comparatively high rates of
economic growth. Favorable long-term growth prospects and a high level
of foreign exchange reserves support the country's sovereign rating,
while large fiscal deficits, a high debt burden, and a
lower-middle-income economy constrain it.



India's economy expanded roughly 8%-9% in the three years before the
recent global financial crisis. According to data from India's Planning
Commission, rapid growth contributed to a decline in the poverty rate to
29.8% in 2010 from 37.2% in 2005, implying a drop of 40 million people
in the absolute number of the country's poor. Per capita income doubled
during those five years. In addition, the total fertility rate (the
average number of children a woman conceives) fell to 2.5 in 2010 from
3.2 in 2000.



India's GDP growth in the most recent quarter was 5.3%.

GDP is expected to grow about 6.5% in fiscal year 2012-2013, similar to
the rate in fiscal 2011-2012. Both savings and investment rates (as a
share of GDP) rose impressively, in step with GDP growth, until fiscal
2007-2008, before declining modestly in subsequent years (see chart 2).
The public sector savings rate has historically been low, but itrose to
5% of GDP in fiscal 2007-2008 as the government narrowed its fiscal
deficit, before dropping precipitously in recent years.The combination
of fiscal strain and lower corporate profitability could reduce both
public and private sector savings rates in coming years. Lower savings
would translate into lower investment and a higher current account
deficit. The result would be either lower GDP growth or a higher
external deficit that makes the country more vulnerable to external
shocks.

http://nextbigfuture.com/2012/06/india-could-get-junk-credit-rating.html

They start ass fucking India. This ought to be very interesting. 1) India will retract and prepare for full blown currency war. And they are huge. MUCH bigger capability than spain or italy. 2) they gonna massively changed export-import/capital flow balance 3) it won't be a nice fight. It'll be nasty inter continental industrial/financial sabotages.

I am not sure if India policy makers are stupid and not prepared for this, but rest of asia has been ready for this day since 97 crisis. Once market signal is out, every government will be in financial battle mode. Capital flow and currency control regimes will be switched on. Liquidity will be gone outside protected area overnight.

It will be fucking HUGE financial war... I wouldn't be on dollar side. that's for sure.

The continuing credit crisis is serious—with the world economy poised
for a double-dip recession. The current US government policy of
increasing the national debt by $5 trillion dollars over the past four
years, keeping insolvent banks from going bankrupt, a Federal
Reserve zero interest rate policy (ZIRP), causing malinvestment, and
monetizing the national debt (which is what tin-pot dictators do just
before they are forced to flee the country) with quantitative easing by
the Fed, and austerity for the 99% to repay bad bank loans has not
worked—and doing more of the same will not work—and defines insanity.

The financial elite are using this “cover-up and pray” policy—hoping that rekindled “animal spirits” will bring the economy back in time to save the status quo. This is impossible because the trust is gone. The same sociopaths control the economy.
Instead, the financial elite are just protecting themselves with
outlandish pay bonuses, based on cooked books; while the “real economy”
flounders with high unemployment, unsustainable budget deficits, a
struggling real estate market, and low capital formation, crumbling
infrastructure and high gasoline and food price inflation.

http://www.zerohedge.com/news/guest-post-everything-you-know-about-markets-wrong

you forget the "international" dimension of all this. There is "other" people, sovereign nation on the other side, not just some vague/esoteric idea. "market". In other time and era what happens right now would be considered act of war. Let's put it this way, imagine if  China were 10 times the size and doing what US is doing to other country, with all the cover of "free market" jibe, everybody will be up in arm ready for war ..... (note: China right now is only about half the size of US. already currency manipulation, containment, .. bla bla..)

MADRID, June 11 (Reuters) - Telefonica SA's
surprise sale of around half its stake in China's no.2 telecoms
operator is the latest sign that the company's management is
taking seriously the reduction of its 57.1 billion euro ($71.4
billion) debt pile.

The Spanish telecoms group said on Sunday it would sell 4.56
percent of China Unicom's shares back to the latter's parent for
around 1.1 billion euros ($1.4 billion), a move it said would
increase its financial flexibility."It's overwhelmingly positive ... it points to them being
willing to do things that are different (to reduce) ... their
debt," said Robin Bienenstock, senior analyst at brokerage
Alliance Bernstein.Telefonica needs to raise between 7 and 8 billion euros a
year through 2015 to cope with debt maturities and is also
struggling with sinking revenue and profit in its home market,
where one in four is unemployed and the banking industry is in
crisis.
http://www.reuters.com/article/2012/06/11/telefonica-china-unicom-idUSL5E8HB9QW20120611

how the fuck does a small phone company like telefonica have $50-60Billion debt?  ...? did they have cocaine and caviar party every night? That much money is enough to give half of europe free phone service for life!
I still need somebody to explain how tiny country like Greece can have $100B+ debt ...

Conclusion—this is what to do:

1. Reenact the Glass-Steagall Act. Allowing investment banks to speculate with savers’ money is criminal.
2. The daisy-chained, unregulated $707 trillion dollar OTC Derivatives
   market will bring down the world economy, when it goes bust. JP Morgan’s
   recent huge OTC Derivative trading losses are a prelude to this
   eventuality, with many more instances to come. Start unwinding the OTC Derivatives market now, before it is too late.
3. Insolvent banks are a drain on the “real economy.” Force insolvent banks to go bankrupt. TBTF is an irrational policy. Allow capitalism to work for the 1%.
4. Public and private debt to GDP is about 360%, and 30% of Americans
   are being hounded by bill collectors for unpaid debts. Americans can no
   longer service their massive debt loads. Allow debt forgiveness for the 99% and institute austerity for the 1%—they can afford it.
5. ZIRP is destroying capital formation and savers. Allow interest rates to rise,
   which will increase consumer demand. The Fed’s manipulation of capital
   markets causes malinvestment—resulting in crippling long-term penalties
   for the “real economy.”

http://www.zerohedge.com/news/guest-post-everything-you-know-about-markets-wrong

If I were in charge... this is what I will do.

1. declare.: it's time to get real . we have inspectors ready to check all you banksters and your books. welcome to capitalism economy. where is my money?

2. Overnight interest rate, instantly returning to historical average. Giving money back to savers. and ending debt ridden players. (i seriously think housing problem is fairly trivial, and people will again buy and sell houses, albeit at much lower market prices. The problem is banking fantasy asset derived from fraudulent  housing prices. Fix money flow into real economy, and economy will recover in earnest instead of current zombie recovery.)

3. Government will guarantee all smaller healthy banks, and provide money directly to "real economy" through all these clean and healthy banks. You make something or do productive works. Have free money. Congratulation. you've been acting responsibly. Have some capitals. The fed will be dissolved and replaced by group as far away from current banking cartel set up. no more few members of banking cabals voting for money price. Price of money will be determined more transparently. Current members of fed will be executed, for incompetency, fail to fulfill public duty, and mismanagement.

4. ensure critical material for national survivals are protected during turmoil. If necessary nationalized.

5. all major currencies will be temporarily "peg" (soft peg) to prevent major hot money moving here and there destroying already fragile global trade. probably released gradually after 2-3 years.

6. Naturally, all those TBTF banks will go bankrupt overnight. instantly. And come running asking for government bail out. At which point. government should answer.. sure. Here is the rate. we know your book. what do you have for us in exchange for our money? Hard and impossible bargain. Specifically designed to kill TBTF. start shooting when bankster even give a hint of acting smart. (national security, economic terrorism, fraud, crime, etc. waste them all. it's not like the world will run out of banksters or anything. They multiply faster than pests. ) 

7. all OTC derivatives cancelled (obviously, we will know by then all TBTF OTC transaction from their books. most can be safely disposed. have inter government agreements between top 10-15 biggest economy. probably involving less than 20 biggest global banks)

8. all derivatives will now only be sold via public exchanges. Size and contract form will be regulated proportionally to its risk to public life.

9. after that one can begin restructuring international regulations.. banking, currency, commodity markets, trades, etc. without interference from by now bankrupts TBTF's. half of their lobbyists probably would be executed or in jail.

10. Intra government debt will be dealt with directly between sovereign nation ( all those inside TBTF books has become government properties due to their collapse)

11. destroy current banksters controlled political machine set up. Nicaraguan style death squad seems suitable. works nicely to clean up unpleasant elements in other countries... why not try it at home? After the big crash no one will shed a single tear when these people are exterminated. Works the same way every countries all over the world when big economic crisis hit. Hey, try losing pension, no job, bank run, currency destroyed and public money gutted by corruption...   

economy will shrink 5-10%, painful, but will recover much faster. There won't be decades long structural unemployment and generational drag from huge debt created by and distributed to only very few players. Money will flow to right places, no more casinos and TBTF.

The first non-principal exchange currency swap has been dealt between
the US dollar and the Chinese yuan, highlighting the liberalisation of
the foreign currency into the global markets.

HSBC Bank
released a statement saying it had traded its first
non-principal-exchange currency swap between the US dollar and the
Chinese yuan with a notional amount of $10 million with Industrial Bank.
The swap puts HSBC among the first banks to trade the new derivative.

http://www.corporate-fx.co.uk/marketupdates/News/Story/first-dollar-yuan-non-principal-exchange-currency-swap-dealt-1339400091.html

Former HKMA Chief Calls for Review of Hong Kong Dollar Peg

Yuan Peg?

Yam’s paper said the trading band could be widened or
turned into “a corridor” whose width, slope and center could
be periodically reviewed. The latter option could be managed
against the dollar, yuan or a basket of currencies, he wrote.

China ended its own peg to the dollar in July 2005, saying
it would manage the exchange rate against a basket of currencies,
and the yuan has strengthened 30 percent versus the greenback in
that time. Chinese officials told European Union business
executives that the yuan will achieve “full convertibility” by
2015, EU Chamber of Commerce in China President Davide Cucino
said on Sept. 7.

There has been talk about whether Hong Kong should scrap
the peg or re-peg to the Chinese yuan, as the current fixed
exchange rate means the city’s monetary policy is largely
dictated by the U.S., where a jobless rate of 8.2 percent has
led the Federal Reserve to pledge near-zero interest rates
through 2014. Hong Kong’s home prices have gained more than 80
percent since early 2009, supported by record-low mortgage rates.

http://www.bloomberg.com/news/2012-06-12/former-hkma-chief-calls-for-review-of-hong-kong-dollar-peg-1-.html

http://www.sacbee.com/2012/06/12/4556508/us-federal-deficit-totals-8445b.html

The federal budget deficit is rapidly approaching $1 trillion for a
fourth straight year even though the government is collecting more tax
revenue than last year.

The Treasury Department says the deficit
grew by $124.6 billion in May. That put the deficit through the first
eight months of the budget year at $844.5 billion, or 8.9 percent below
last year's imbalance for the same period.

Still, the
Congressional Budget office forecasts that the deficit for the entire
2012 budget year, which ends Sept. 30, will total $1.17 trillion. That's
only a slight improvement from the $1.3 trillion deficit recorded in
2011.

So far this year, government receipts are running 5.3 percent higher
than a year ago. A better job market and modest economic growth have
led to higher tax revenue.

I've been playing the same game of Civ II for 10 years. Though long
outdated, I grew fascinated with this particular game because by the
time Civ III was released, I was already well into the distant future. I
then thought that it might be interesting to see just how far into the
future I could get and see what the ramifications would be. Naturally I
play other games and have a life, but I often return to this game when
I'm not doing anything and carry on. The results are as follows.

• The world is a hellish nightmare of suffering and devastation.

• There are 3 remaining super nations in the year 3991 A.D, each
  competing for the scant resources left on the planet after dozens of
  nuclear wars have rendered vast swaths of the world uninhabitable
  wastelands.

-The ice caps have melted over 20 times (somehow) due primarily to
the many nuclear wars. As a result, every inch of land in the world that
isn't a mountain is inundated swamp land, useless to farming. Most of
which is irradiated anyway

-The only governments left are two theocracies and myself, a
communist state. I wanted to stay a democracy, but the Senate would
always over-rule me when I wanted to declare war before the Vikings did.
This would delay my attack and render my turn and often my plans
useless. And of course the Vikings would then break the cease fire like
clockwork the very next turn. Something I also miss in later civ games
is a little internal politics. Anyway, I was forced to do away with
democracy roughly a thousand years ago because it was endangering my
empire. But of course the people hate me now and every few years since
then, there are massive guerrilla (late game barbarians) uprisings in
the heart of my empire that I have to deal with which saps resources
from the war effort.

-The military stalemate is air tight. The post-late game in civ II is
perfectly balanced because all remaining nations already have all the
technologies so there is no advantage. And there are so many units at
once on the map that you could lose 20 tank units and not have your
lines dented because you have a constant stream moving to the front.
This also means that cities are not only tiny towns full of starving
people, but that you can never improve the city. "So you want a granary
so you can eat? Sorry; I have to build another tank instead. Maybe next
time."

http://www.reddit.com/r/gaming/comments/uxpil/ive_been_playing_the_same_game_of_civilization_ii/

• Forget ending the war, try and get your front line such that you can
  consistently withstand attack, forcing a stalemate. Basically stop
  wasting production on tanks and planes that are going to get nuked
  anyway.
• Change to fundamentalism, I remember this was bad for research but
  you don’t need it now anyway, but the people will stop hating you and
  you'll have more coin.

Diplomacy's failed in this world, you’ve got to hit em hard and take
over the world for the greater good. Then you can spend turn upon turn
under the blanket of enforced religious peace fixing it with hundreds of
engineers if you like!

-----------------------

Dire simulation.

Next civilization game should contain economic model...I wouldn't be surprised if it simulate current banking foolies with amazing fidelity.

The chairman of Taiwan Semiconductor Manufacturing, the world’s
largest contract microchip maker whose numerous U.S. business partners
and customers include Qualcomm, reportedly said yesterday the U.S.
economy appears to have “turned bad” in the past two months, based on
recent employment data.

Job growth in the U.S. is only about a third of what it was at the
start of the year, Morris Chang said at TSMC’s annual shareholder
meeting yesterday, according to a report in today’s Economic Daily News.
Adding in the Europe’s debt problem, the situation isn’t favorable,
the report said.  More than 70% of TSMC’s business comes from the U.S.,
the Economic Daily News reported.

http://www.forbes.com/sites/russellflannery/2012/06/12/tsmcs-morris-chang-reportedly-expresses-concern-about-pace-of-u-s-economic-recovery/

just wait until the european slowdown reached this side of atlantic. this on top of asian retraction ..

Let's have MORE OIL war...

JPM's Bogeyman IG9 Notionals Soar On Most Active Week Of YearThis suggests an unwind of a delta-hedged tranche position with considerably more index impact than tranche impact - which smells just like what we think JPM was struggling with (and it appears is far from over). However, there was a huge jump in the number of trades done in the on-the-run index IG18 - last week was the most active of the year by far which fits with the surge in gross notional that we saw - as it would appear (as we noted previously) that the focus is now on using liquid indices to hedge whatever risk remains on JPM's book - which further helps to explain why IG18 has underperformed so much recently relative to HY credit and stocks.

http://www.zerohedge.com/news/jpms-bogeyman-ig9-notionals-soar-most-active-week-year

I wonder if anybody knows what product exactly did they lose... (I mean it got to be pretty shitty and can't be sold in current market at all. So how big was it? I bet it's really still in the book, fudged and all...

Bankrupt Saab finds buyer in Chinese-Japanese investment
group

A
Chinese-born Swedish investor with Japanese support has agreed
to buy bankrupt automaker Saab Automobile and plans to bring it
back to life as a maker of electric cars, with an initial focus
on the Chinese market.

Saab, which has been making cars since 1947, crashed into
bankruptcy at the end of 2011, less than two years after former
owner General Motors sold it to Dutch group Spyker.

Though an admired brand with a loyal fanbase, Saab had
struggled for years to survive against bigger competitors.

http://www.reuters.com/article/2012/06/13/saab-idUSL5E8HD1RY20120613

The economic
and political chaos in southern Europe would
create spaces for previously unthinkable new
geopolitical competition. Russia could come to the
rescue of Greece and create an axis of the
Orthodox faith that embraces Athens and reaches up
to Belgrade, standing then in the heart of the
Mediterranean, a place she always wanted but
always failed to reach.

Moreover, Saudi
Arabia, Qatar or their satellites could help Spain
in exchange for transforming the deserted
skyscrapers of the local busted real-estate bubble
into minarets. This could lay the foundations for
a Muslim re-conquest of Catholic Spain, half a
millennium after the devout Christian kings of the
peninsula wrested the place from Islam. The
political geography of Europe could revert to what
it was nine centuries ago, before the Norman's
invasion of Southern Italy. Then Islam had reached
the Pyrenees, the Byzantine Orthodox empire held
the Eastern front of Europe, the ancestors of the
western powers, the Germans and Franks, were
clasped north of the Alps and Italy was the
battleground of all forces, with Islam in Sicily,
Greek orthodox up to Naples and from Rome
northward a flimsy Germanic control.

All
of this could be spiced up by cautious yet
effective Chinese investment. Beijing dreads
chaos, thus thinks that it is necessary to
intervene early for stabilization, without
considering that this could be an opportunity for
expansion.

These perspectives perhaps are
not in the interests of Obama and Merkel - or even
France and the UK. Here serious economic problems
can become even more serious political issues.
Then an immediate intervention by Americans or
Germans on fragile Greeks, Spaniards and Italians
is possible. But across the Atlantic, there are
also those who hope that global economic
difficulties will cause Obama to lose the
election. And in this, there is a China angle that
carries the most serious consequences worldwide.


America, hit by the backlash of a European
economic default, without the continuity of the
Obama administration and without easy, short-term
solutions, might be tempted to find shortcuts,
engaging in wars that could, as traditionally wars
do, remove outstanding debts. Washington may be
hot toward Iran, or more or less cold against its
new challenger, China.

A clash between the
US and Iran, along with deepening US-China
friction, would also be useful to the two possible
beneficiaries of the chaos of Europe: Russia and
Saudi Arabia, both of which would then have a
freer hand in Europe and the Middle East.


Washington should then choose to leave
Asia to China and regain Europe and the Middle
East, or vice versa. Fighting on all fronts would
be very difficult.

http://www.atimes.com/atimes/Global_Economy/NF14Dj03.html

In many countries, disappointment with Obama
appears to be tied to frustration with the United States acting on its
own: Three years ago, 45% of people polled said they expected that Obama
would consider their countries' interests. Only 27% now say they
believe that Obama has done so. Also, 45% said they thought Obama would
seek international approval for using military force. Now only 29% say
they think he has done so.

The idea that the U.S. throws its weight around without consulting
other countries has persisted. In most of the countries in the survey,
more than half of the people polled said the U.S. considers their
interests "not too much" or "not at all."That feeling was strongest in
Spain and Egypt, where 82% and 80%, respectively, expressed it.

Using drones to combat militants in countries such as Pakistan or Yemen
was also deeply unpopular in most of the countries surveyed -- a stark
contrast to the U.S., where 62% of respondents approved. In 17 out of 20
countries, more than half of respondents said disapproved of drone
strikes. (The question was not asked in Pakistan or Yemen.) Drones were
most fervently opposed in Greece (90%) and Egypt (92%.)

Despite expressing disappointment with Obama, people in many European
countries largely said they wanted to see the president Obama
reelected, especially in France and Germany, the poll found.

..

-- German Chancellor Angela Merkel is seen positively in Germany and
across much of Europe, with popularity ratings of 70% and 58% in France
and Britain, respectively. But feelings about her are much more sour in
Southern Europe, especially in Greece, where only 7% said they have
confidence in her.

http://latimesblogs.latimes.com/world_now/2012/06/obama-popularity-abroad-pew-poll.html

All this gonna matter a great deal soon, as international finance system collapses and everything must be backed by "words" and "shake hand". He gets nothing, since nobody trust him anymore.

Merkel is the only leader who made tough choice and doesn't fuck around.

May retail sales fall as gas purchases tumble

April sales revised lower to mark first back-to-back drop in two years

http://www.marketwatch.com/story/may-retail-sales-fall-as-gas-purchases-tumble-2012-06-13

G-20 Unlikely to Make Headway on Europe, Official Says

As the Federal Reserve prepares to
meet next week, policy makers are under conflicting pressure to
do more to stimulate the economy and to swear off quantitative
easing. And that’s just from inside the Fed.

In congressional testimony last week, Fed chief Ben Bernanke refused to tip his hand. His prepared remarks
highlighted both positive and negative trends in the U.S.
economy -- a profitable business sector at home and nasty
headwinds from Europe -- suggesting he’s not ready to pull the
trigger just yet.

http://www.bloomberg.com/news/2012-06-13/europe-may-force-bernanke-to-flip-the-twist.html

still won't fix the TBTF... no amount of money in the world will be enough trying to prop their imploding book. TBTF has to end.

Over the past several years, several incidents have made it clear
that despite the popular belief of the masses that the criminal banking
cartel is too powerful to defeat, that defeating them is definitely
within the realm of possibility. The fallout from JP Morgan’s
media-dubbed “London Whale” this year and the SemGroup bankruptcy in
2008 aptly demonstrated this.  The story about JP Morgan employee Bruno
Iksil first broke when traders, using the size of price movements and
trades they witnessed in a synthetic bond index known as CDX.NA.IG.9,
suspected one trader of holding a singular massive position. Later,
Iksil was revealed to be holding up to a $100 billion position in CDS
(Credit Default Swap)exposure in this particular index. When the
underlying bond market turned against Iksil’s massive bets in the
CDX.NA.IG.9, reports started leaking that JP Morgan could be facing a $2
billion loss. Iksil’s position also revealed JP Morgan’s Blythe Masters
to be a master liar as she had just appeared on CNBC to refute
allegations that JP Morgan traders ever engaged in deliberate
manipulation of markets just before the Iksil story broke. Remember,
Iksil’s massive position was discovered when other traders witnessed
that one trader’s moves were influencing the entire behavior of that
index and put their positions at enormous risk, the very definition of
manipulation. However, the downside of holding such a deliberately
massive manipulative position also soon became apparent to the chagrin
of JP Morgan’s Jamie Dimon and Blythe Masters – a small market moved
against you could create enormous losses on paper at a very rapid rate.

Once traders discovered the size of Iksil’s massive position,
they started taking the opposite side of Iksil’s trade to deliberately
move the market in the opposite direction, knowing that Iksil would then
be left facing a huge conundrum. Iksil could choose to assume defensive
strategies whereby newly assumed positions could hedge some of the
growing losses on his open positions but unfortunately, would also
contribute to increasing the spread on the losses of his original
positions. Because Iksil chose to assume a massive position that could
only be described as having a goal to manipulate the CDX.NA.IG.9 index
to make profits for JP Morgan, once knowledge of this position became
known, it immediately became vulnerable to be manipulated itself so that
it would eventually implode. And in the financial world of vultures,
once vultures smell blood, there is no saving the carcass from doom.

http://www.zerohedge.com/contributed/2012-06-14/blueprint-kill-jp-morgan’s-alleged-massive-manipulative-position-silver-futur

As there is less and less player, information quality spikes. The few remaining players knows what the others are doing. Ultimately this is where sovereign backing comes into play. small players like UK will be crushed.

Nearly the exact same scenario led to the downfall of SemGroup
Holdings, a private firm based out of Tulsa, Oklahoma. Based upon
SemGroup’s eventual declared $2.5+ billion in

losses in 2008, analysts backward engineered a figure for SemGroup’s
massive short position in crude oil of 50 million barrels, or
approximately a whopping 17% of the entire US crude inventory of 300
million barrels at the time. So what made SemGroup’s short position blow
up? Again, there is strong circumstantial evidence that another firm’s
knowledge of SemGroup’s massive short position left it vulnerable to
attack. Basically, the story goes like this. Citibank, Merrill Lynch and
Goldman Sachs were all involved in a failed $1.5 billion private

placement for SemGroup early in 2008. As a result of the standard due
diligence and forensic accounting required for such a private placement,
all three firms almost undoubtedly obtained intimate knowledge of
SemGroup’s massive short position in crude oil during early 2008. Just
as banks with knowledge of Iksil’s trading position have now squeezed
Iksil’s failing position and caused Iksil’s losses to likely eventually
balloon to multiples of the originally estimated $2 billion loss, many
people familiar with the SemGroup’s contribution to the oil spike from
$100 a barrel to $147 a barrel in 2008 suggested that Goldman Sachs had
used their inside information (quite illegally by the way, if this is
what indeed occurred) to take the opposite side of SemGroup’s position
and deliberately force oil prices much higher at a time when SemGroup
could least afford it. By squeezing SemGroup’s shorts and causing
SemGroup’s already substantial losses to multiply, Goldman
Sachs allegedly single-handedly was able to engineer the spike in oil
futures from $100 a barrel to $147 a barrel in 2008, and in the process, profit massively from SemGroup’s demise.  

-------------------
and that 2008 commodity spike arguably greatly accelerate the collapse of subprime due to gigantic spike of gas that leads to slowing economy.

But Goldman got a Bazooka bailout. Yay hank paulson... (History will soon demand these people be exterminated, due to market manipulation.)

I think ultimately this is how dollar collapse will be triggered. The asian players will have more information, more complete picture of global transaction due to Yuan exchanges. And this will enable them to expose a lot of weak positions by rival dollar only players. And then the fight will be at the margin of "trust". Will the yuan new contract be executed or nullified.. etc. (and there is no historical data on this. So it's pure bet. but with much more money than dollar side can put out if lost.)

So all the chinese has to do to control yuan spread is playing...I'll play or not play. All they have to ask is, if dollar worth more to them alive or dead. Pray hard when the chinese doesn't need dollar anymore, cause then they will play the full spectrum game.

Imagine the cost of propping up JPM bank run. The money pumped will be so big, it will create economic slow down from stagflation and erosion of dollar credibility. It'll be nothing compared to Spain right now.

WASHINGTON
–
The U.S.
current account trade deficit widened in the first three months to the
largest imbalance since late 2008, reflecting a big increase in imports
in oil, cars and machinery and a drop in U.S. earnings on overseas
investments.

The deficit in the current account, the broadest measure of trade,
jumped 15.7% to $137.3 billion, up from $118.7 billion in the final
three months of last year, the Commerce Department reported Thursday.

http://www.usatoday.com/money/economy/trade/story/2012-06-14/current-account-deficit-1Q/55593968/1

Let's have more war! It does wonder to international commerce.