We are working our way through our series, ‘The Good, the Bad, and the Ugly.’
You are probably as disgusted by the bad and the ugly as we are. So today, we touch briefly on the good.
Yes, there are good people all around us. Private life is full of them. A good gardener. A good clergyman. Even a good banker.
But in public life, a good man is hard to find.
You can search the nation’s capital from top to bottom, including the broom closets. You won’t find many. Instead, the bright lights of ‘public service’ attract bugs, pests, and parasites.
Some are a nuisance. Others are dangerous.
Trouble in the bond market
We have promised to leave the vermin for tomorrow. But we can’t help mention one of them, former top US Army commander and CIA director David Petraeus.
He figures in today’s story like the mythical Cyclops: He is the nemesis that brought forth our hero.
It was in New York City, at the 92nd Street Y, which advertises itself as a ‘world-class cultural and community centre,’ that Petraeus was scheduled to speak…
But let us interrupt with a quick market update. US stocks sold off a bit more yesterday, with the Dow down 82 points — or about 0.5%.
Gold was more or less flat. At $1,181 an ounce ahead of the bell on Wall Street, it is still down from the $1,200 level where it was stuck for so long.
The big money is worried…but not yet panicky.
Greece is getting ready to bolt the European Union.
China seems on the verge of a major crisis.
And as we warned in my new investor presentation, there’s a violent monetary shock on the horizon.
Meanwhile, the price of German sovereign bonds, regarded as among the safest credits in the world, have been falling hard. Colleague Tim Price, in London, has the story:
‘Our favorite “risk-free” reference rate is the yield on the German government 2.5% bond maturing in August 2046. Since mid-April, the yield of this bond has risen by just over 1 percentage point, from 0.46% to 1.54% at the end of last week.
‘Sounds relatively innocuous, no?
‘That rise in yield equates to a fall in price of roughly 36%. In just over a month. We thought the collapse in Bund prices was grisly, until we spotted the carnage unfolding in the Austrian government bond market.
‘Ladies and gentlemen, we give you the Austrian government 3.8% bond maturing in January 2062. The price of this “risk-free” asset has fallen from roughly 220 to 162 as of the end of last week. That is a fall in price of nearly 60%.’
If euro zone government bonds are collapsing, can US Treasury’s be far behind?
We’ll come back to that soon. In the meantime…
Twisting the truth
In 2011, Petraeus was the golden boy of US foreign policy ambitions.
He was the man behind the ‘surge’ of US troops in Iraq in 2007. It was less clear than now that this was a disaster.
It cost billions of dollars. It got thousands of people killed, including another 1,000 American soldiers. And many of the weapons Petraeus sent to Iraq ended up in the hands of ISIS — including 2,300 Humvees, 74,000 machine guns, and 40 Abrams tanks — which are now helping ISIS take control of Iraq!
The event in New York came years later…
Petraeus had been disgraced, after cheating on his wife with his biographer, US Army Intelligence Officer Paula Broadwell. He was in charge of America’s top ‘security’ agency, the CIA. But he had given the ‘black book’ — with the most sensitive information in the country — to his mistress (who was also writing a book to explain what a great guy he was).
You’d think he’d get the firing squad for that kind of a breach…
But former CIA officer turned political activist Ray McGovern was onto him. Despite his crime, Petraeus was still enjoying the fame and adulation of a conquering hero. So great was his appeal that tickets for the event at the Y sold for $45…one of which was bought by the aforementioned McGovern.
McGovern first came to our attention earlier in the year, when he attended a speech by Hillary Clinton at George Washington University. He turned his back on the then secretary of State, which got him arrested for disorderly conduct.
But McGovern was no ordinary protester. He is retired from the CIA, where he used to prepare the top secret President’s Daily Brief.
Now 72 years old — he devotes himself to revealing the misuses of ‘security information.’ He didn’t like the way the George W. Bush administration twisted the truth to support its invasion of Iraq. He also protested the use of torture in Guantanamo, Abu Ghraib, and elsewhere…and sent back his CIA service medal to his former employer.
The incident with Hillary must have gotten him on a list. The snoops must have been on his case before he showed up at the Y — expecting to exercise his constitutional rights to peaceful assembly and free speech.
What he wanted, in particular, was to ask David Petraeus a few questions.
‘You can’t go in there, Ray,’ said a cop, as McGovern tried to enter the Y.
Ray explained that it was a public forum and that he had bought a ticket. He said he had a right to enter…and was swiftly arrested for disorderly conduct!
The cops held him overnight, and then he was released.
By contrast, Petraeus — who had committed a serious crime — served no time.
More to come…
For The Daily Reckoning, Australia