David Rosenberg has provided his typically succinct summary of the day's heavy dataflow, starting with the GDP number, parsing though Bernanke's speech, and concluding with a broad overview of where the market is heading, which is now so disconnected form a bond-implied FV in the upper 700s it is no longer funny.

On GDP:

GDP BETTER THAN EXPECTED, BUT …

Boy oh boy, 1.6% never felt so good. Bonds are getting hammered and the stock market is surging on a GDP growth number that basically represents stagnation in real per capita terms. But the consensus was looking for 1.4% and the “whispered” number was actually below 1%, so for Mr. Market, at least on a day-to-day basis, it is all about how things do benchmarked against expectations. The data were weak but not a disaster and so we are seeing a temporary bounce in yields and equity prices, which likely won’t last for very long once Q3 GDP estimates grind down from their current 2.5% forecast to something closer to 0% — or even negative — by the time the first report is published at the end of October. READ MORE

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In The Battle for the Soul of Capitalism Jack Bogle no longer sees Adam Smith’s “invisible hand” driving “capitalism in a healthy, positive direction.” Today, his “Happy Conspiracy” of Wall Street plus co-conspirators in Washington and Corporate America are spreading a contagious “pathological mutation of capitalism” driven by the new “invisible hands” of this new “mutant capitalism,” serving their selfish agenda in a war to totally control America’s democracy and capitalism.

The “Goldman Conspiracy” is the perfect B-School case study of Wall Street’s secret contagious pathology, with insiders like Blankfein, Paulson and others pocketing billions more of the firm’s profits than shareholders, evidence the new “mutant capitalism” has replaced Adam Smith’s 1776 version which historically endowed the soul of American democracy as well as our capitalistic system. But sadly for America, Goldman’s disease is rapidly becoming a pandemic spreading beyond Wall Street’s “too-greedy-to-fail” banks, infecting our economy, markets and government, as it metastasizes globally.

What are the symptoms of this growing “soul-sickness,” this “pathological mutation of capitalism” Bogle fears? Recently we reviewed the consequences of this “soul-sickness.” Today we’ll edit and paraphrase news reports about fifteen symptoms spreading “soul-sickness” beyond the boundaries of this Goldman case study: These are the 15 signs of a moral pathology undermining not just banking, but American democracy and capitalism.

1. Gross denial of any moral damage caused by their rampant greed
Seeking Alpha: ‘Goldman is America’s most hated corporation. We cheer as Rolling Stone’s Matt Taibbi calls Goldman “a giant vampire squid wrapped around the face of humanity.” Banks triggered a global crisis. Main Street suffers. Greedy bank CEOs raid the Treasury then stuff $30 billion in their bonus pockets, up 60% from last year.’ They are our 21st century General Motors, convinced ‘What’s good for Goldman is good for America.’ We saw how that arrogance ended. Wall Street has similar suicidal symptoms. READ MORE

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The annual meeting at Jackson Hole always provides a valuable opportunity to reflect on the economic and financial developments of the preceding year, and recently we have had a great deal on which to reflect. A year ago, in my remarks to this conference, I reviewed the response of the global policy community to the financial crisis.

Notwithstanding some important steps forward, however, as we return once again to Jackson Hole I think we would all agree that, for much of the world, the task of economic recovery and repair remains far from complete. In many countries, including the United States and most other advanced industrial nations, growth during the past year has been too slow and joblessness remains too high. Financial conditions are generally much improved, but bank credit remains tight; moreover, much of the work of implementing financial reform lies ahead of us. Managing fiscal deficits and debt is a daunting challenge for many countries, and imbalances in global trade and current accounts remain a persistent problem. On the whole, when the eruption of the Panic of 2008 threatened the very foundations of the global economy, the world rose to the challenge, with a remarkable degree of international cooperation, despite very difficult conditions and compressed time frames. And when last we gathered here, there were strong indications that the sharp contraction of the global economy of late 2008 and early 2009 had ended.

Most economies were growing again, and international trade was once again expanding.

This list of concerns makes clear that a return to strong and stable economic growth will require appropriate and effective responses from economic policymakers across a wide spectrum, as well as from leaders in the private sector. Central bankers alone cannot solve the world’s economic problems. That said, monetary policy continues to play a prominent role in promoting the economic recovery and will be the focus of my remarks today. I will begin with an update on the economic outlook in the United States and then review the measures that the Federal Open Market Committee (FOMC) has taken to support the economic recovery and maintain price stability. I will conclude by discussing and evaluating some policy options that the FOMC has at its disposal, should further action become necessary.

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Got gold? Silver? Farmland? Faith?

A number of the world’s biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China.

HSBC, which recently moved its chief executive from London to Hong Kong, and Standard Chartered, are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chinese currency.

“We’re now capable of doing renminbi settlement in many parts of the world,” said Chris Lewis, HSBC’s head of trade for greater China. “All the other major international banks are frantically trying to do the same thing.”

HSBC and StanChart are among a slew of global banks – including Citigroup and JPMorgan – holding roadshows across Asia, Europe and the US to promote the renminbi to companies.

The move aligns the banks favourably with Beijing’s policy priorities and positions them to profit from what is expected to be a rapidly growing line of business in the future. READ MORE

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How many times have I said systematic failure? We are getting closer and closer. Today will be an important day to see if Helicopter is willing to destroy the (once almighty) dollar for a few weeks maybe days of payday for the banksters. Sad Sad times. We are printing money to buy our own debt. Pathetic.

A senior Washington intelligence source reported this morning that a serious fight has erupted inside the Federal Reserve over hyperinflation, and that people close to the Fed are going to be leaking details, which means the fight will intensify and become more public. He added that that fight is now erupting inside this week's annual Jackson Hole economic summit of the Fed, whose host, Thomas Hoenig of the Kansas City Fed, has publicly dissented from Bernanke's hyperinflationary decisions at each of the last eight meetings of the Federal Open Market Committee. And indeed, sources at that Jackson Hole gathering report that it is an extremely interesting one, especially its off-the-record discussions.

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With the ink of President Obama's signature on the Barney Frank-Chris Dodd financial reform bill barely dry, the next bank bailout already has begun. How can that be, you might ask? Weren't we promised that this "landmark" legislation would end bank bailouts? Weren't we promised that this legislation ushered in a new era of transparency on Wall Street? Could it be that the politicians lied to us? Say it ain't so - but it is.

How can I make such a preposterous claim, you might ask? What evidence do I have to support my assertion? Well, I reply, look no further than the second-quarter earnings report of the Wall Street titan J.P. Morgan Chase. You will, however, have to dig deep into the report, into the financial supplement on Page 32, where the company reports information on the credit quality of its loan portfolio. At the bottom of the page in footnote (a), you will learn of more than $12 billion in non-accrual loans (read: the borrower ain't gonna pay) made by the bank but that the bank does not consider to be "nonperforming."

Why not, you might ask? There in footnote (a) is your answer and prima facie evidence of the next bank bailout. These bad loans are insured by U.S. government agencies. Which agencies, you ask? So do I, because the bank doesn't identify them. But the most likely culprit is the Federal Housing Administration (FHA), which insures residential mortgages.

Of course, it is unfair to single out J.P. Morgan Chase. So take a look at the second-quarter earnings report of Bank of America. There, on Page 40 of its supplemental information, is a line item "Federal Housing Administration insured loans past due 90 days or more and still accruing," showing a balance of more than $15 billion. Why are these loans not considered to be "nonperforming"? The answer is simple: Bank of America plans to collect from the FHA.

Likewise for Wells Fargo. On Page 33 of its supplemental information is a footnote saying that its "90-plus days past due and still accruing" line item "excludes GNMA [Ginnie Mae] and similar loans whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs." By comparing the reported amount with the amount from its Y9C form, which reports basic financial information to the Federal Reserve, I estimate the exposure at more than $30 billion.

If this brings to mind the backdoor bailout of Wall Street banks by AIG, it should. At just these three big banks, the taxpayers are on the hook for almost $60 billion in bailout money. This is yet another way to funnel our taxpayer dollars from Main Street into the banks on Wall Street. So the next time you hear Mr. Obama, Sen. Dodd or Rep. Frank tell us how they have "ended bank bailouts," remember that old comment from Yogi Berra, "This is like deja vu all over again." Only this time, the conduit is not AIG, it's the FHA.

Rebel A. Cole is associate professor of real estate and finance at DePaul University.

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When Ben Bernanke addresses the annual symposium of central bankers in Jackson Hole tomorrow he does so against arguably the most challenging backdrop in his tenure as Federal Reserve chairman.

At the end of a week of gloomy reports, Bernanke faces mounting expectations from markets that the Fed will step in to prop up the US's faltering economic recovery. News of stalling business activity and dismal home sales have fanned talk of a double-dip recession at a time when all the easy options have run out. At the same time, divisions appear to be emerging among his committee of policymakers. READ MORE

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These are not the hyperbolic ramblings of various fringe blogs who have been claiming this for over a year, these are the non-hyperbolic ruminations of Steven Englander, until recently head FX strategist at Barclays, and recently at Citi:"A second round of QE will likely put sharp downward pressure on the USD, to some degree versus the euro and other G10 currencies, with potential for a broader USD sell-off. Foreign investors are likely to view the renewed direct intervention as indicating that the Fed’s balance sheet expansion and implicit monetization of fiscal expenditures are first line approaches to dealing with disappointing recovery prospects, rather than the exceptional measures they were meant to be initially. This could have severe implications for foreign perceptions of the quality of the US assets that they are accumulating in private and official portfolios, and may lead them to draw the conclusion that USD weakness is less a by-product than a desired outcome of these measures...It is difficult to gauge the set of policies that US policymakers will pursue to reduce the risk that the US slumps into a significant slowdown. In the current environment of extremely disappointing growth and apparent lack of response to traditional monetary stimulus, policies that are less than orthodox are likely to be considered seriously. Most of these unorthodox polices are likely to weigh on the USD." Guess what that means for gold...

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The Government has been warned of a “regulatory fiasco” in which British banks have apparently adhered to flawed reporting standards for more than five years.

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